Sounds simple enough, right? It’s amazing how many people simply don’t follow this rule.
We are all guilty of it, but the hope is that we only ignore this rule on minor items. Listen, if I don’t mow the lawn right the first time, no big deal – I’ll fix it the next week when I mow again. However, if I decide to replace my own floor and I screw it up, it’s going to be a much larger, costly and more painful problem.
Doing it right the first time means savings down the road. Whether those savings are measured in time, money, brain damage, or some combination of the three, it always makes sense to do it right the first time. I know, I know, it may take more resources initially so it’s easy to just blow it off. Common refrains are:
I get it – I really do. No one wants to spend resources unnecessarily and you’re a bright, capable person and should be able to figure it out, right? Not always. And those times when you didn’t know what you didn’t know can really come back to bite you. Especially when it comes to legal and business matters, the stakes are higher and you really should do it right the first time.
For example, I saw a scenario where a client formed a new corporation and failed to file a Subchapter S election with the Internal Revenue Service. As a result, it was by default characterized as a Subchapter C corporation and thus subject to two levels of taxation. This is a very inefficient structure and, absent some rare exceptions, is typically never advised for start-up ventures. By the time the client figured this out, plenty of damage had been done and dollars had been lost. For a deeper dive on general corporate housekeeping, see [Time for Your (legal) Checkup].
I spend a lot of time assisting clients with mergers and acquisitions and I often see examples of companies that have not paid attention to corporate housekeeping items. Whether it be making sure your governance documents are in order or ensuring that your financial statements are prepared properly, doing it right the first time will at a minimum make the process easier when you are trying to sell and could potentially make a large difference in the purchase price a buyer is willing to pay.
There are many examples but suffice it to say that there are many issues that arise in the life cycle of a company that could be avoided altogether with the advice and counsel of advisors with relevant expertise and experience on the front end.
Do yourself a favor and surround yourself with a team that knows all of the areas you don’t and then listen to that team to be sure you do it right the first time. Trust me, you will be happy you did.