Tag: management

The $300K Wake-Up Call: Why Business Partners Need Quarterly Check-Ins

As a business attorney, I see this story play out in my office more often than I’d like. What started as a complementary partnership ended with a quarter-million-dollar debt, personal liability, and two former friends who can barely speak to each other.

(*** This is a real story but not real names or client data***)

Sarah was the marketing genius. Her partner, Lisa, was the operational mastermind. Together, they built a thriving brand consulting business, helping mid-tier jewelry retailers navigate market trends, manage inventory, and grow their retail presence.

For two years, everything seemed perfect. They’d divided their client accounts 50/50, each playing to their strengths. Sarah excelled at trend forecasting and brand positioning, naturally earning higher commissions from her more successful client relationships. Lisa focused on operations and design, steady and reliable work but without the big commission wins.

Then the pandemic hit.

Instead of having a conversation about the growing income disparity or their different risk tolerances, they made what seemed like a logical decision: splitting the business into two divisions. Sarah would handle brand management and retail consulting. Lisa would manage the in-house design and inventory sold to third parties.

When jewelry sales unexpectedly skyrocketed during lockdowns, Lisa saw an opportunity. She took out a $300,000 EIDL loan for the company to expand inventory.

When the market reality set in and sales plummeted, that loan became a business-ending nightmare.

After a year of private mediation and mounting legal fees, they decided to dissolve the partnership.  That’s when one partner came to my office. But here’s the legal reality that shocked them both: the SBA loan required immediate payment in full upon dissolution, or both partners would be personally liable for the entire amount.

I see variations of this story in my practice regularly. The legal consequences of poor partnership communication are real, expensive, and often devastating.

Preventive Law: Your Best Defense Against Partnership Disputes

In my practice, I always tell clients that the best legal strategy is the one that prevents problems before they need legal solutions. Regular partnership check-ins are essentially preventive law in action. 

Here’s why quarterly conversations are legally smart:

They create documented agreement. Regular discussions about roles, compensation, and major decisions create a paper trail of mutual understanding that can prevent disputes later.

They surface authority issues early. That surprise EIDL loan? A quarterly financial review would have clarified who had authority to take on debt—and whether both partners needed to consent.

They address fiduciary duties. Partners owe each other legal duties of loyalty and care. Regular communication helps ensure both partners are meeting these obligations.

They prevent claims of breach. Many partnership disputes stem from unexpressed expectations. Regular check-ins force these expectations into the open where they can be addressed.

The 10 Conversations That Could Have Saved This Partnership

I’ve developed a quarterly check-in framework that addresses exactly these kinds of partnership pitfalls. These aren’t just nice-to-have conversations—they’re business survival tools.

Big Picture Alignment: Has anything shifted in your personal or professional goals? (This would have caught Lisa’s growing frustration with lower commissions early.)

Red Flags and Unspoken Issues: What are you worried about or holding back on? (The perfect space to address income inequality before resentment builds.)

Legal and Compliance Review: Do we need to update contracts, insurance, or review our operating agreement? (This could have prevented confusion about loan authority and personal guarantees.)

Succession and Buy-Sell Planning: What happens if one of us wants out or something happens to us? (A clear exit strategy could have avoided the debt acceleration crisis.)

The complete framework includes 10 essential topics plus a bonus conversation about market feedback—all designed to keep partners aligned before decisions become disputes.

Your Quarterly Insurance Policy

Ninety minutes every quarter. Ten structured conversations. That’s infinitely cheaper than litigation, mediation, and business dissolution.

As an attorney, I’ve seen what happens when partnerships fail. The emotional cost is devastating, but the financial and legal consequences can be catastrophic. The good news? Most of it is completely preventable.

Protect your partnership—and your personal assets. Download my free “10 Conversations to Have with Your Business Partner Every Quarter” tool below. These aren’t just business conversations; they’re legal protection strategies that can save you from costly disputes and personal liability.

Don’t wait until you’re calling a lawyer. Start the conversation today.

Download Link: 10 Conversations to Have with Your Business Partner Every Quarter

About the Author: Dawn Kennedy is a business attorney who helps entrepreneurs protect what they have built, including stronger partnerships which can often avoid costly legal disputes. More blogs and resources are available at https://dawnkennedylaw.com

Photo Credit: Photo by Antoni Shkraba Studio: https://www.pexels.com/photo/symmetrical-image-of-people-arguing-in-an-office-6632532/

What to do when someone acts unethically in business, but you have no legal recourse

It’s one of the most frustrating situations a business owner can face: someone has clearly wronged you ethically, but legally, you have no recourse. Maybe they misrepresented their business during a sale, broke promises that weren’t in writing, or engaged in deceptive practices that you can’t prove in court. You know what they did was wrong, but your attorney has delivered the hard truth—there’s no legal remedy available.

If you’re in this situation right now, you’re not alone. And more importantly, this setback doesn’t define you or your business future.  Here are some strategies for moving forward after unethical business practices.

A Real Example: The $30,000 Lesson

Recently, we worked with a business owner who discovered that the seller of a business she purchased had used fraudulent tax returns during due diligence. These false documents made the business appear more profitable than it actually was, influencing both her decision to buy and the price she paid.

Was this unethical? Absolutely. The seller deliberately deceived her with falsified financial information.

Did she have legal recourse? Unfortunately, no. The purchase contract contained a broadly written indemnity clause that she had signed without legal review, effectively waiving her right to seek damages for misrepresentations. The cost of this harsh lesson: approximately $30,000.

When Ethics and Law Don’t Align

This situation illustrates a difficult reality in business: not every ethical wrong has a legal remedy. Sometimes people can behave unethically while remaining legally protected. The legal system, while robust, doesn’t provide recourse for every moral failing or business disappointment.

But here’s what’s important to remember—and what we tell every client who faces this situation: You will be okay.

What You’ve Actually Gained (Yes, Really)

When you’ve been on the wrong end of unethical business practices, it’s natural to focus on what you’ve lost. But let’s reframe this experience and recognize what you’ve actually gained:

  1. You’ve Learned What NOT to Do

This experience has given you invaluable knowledge about business practices, contract review, due diligence, and risk assessment. You now know pitfalls that many business owners never encounter until it’s too late. This wisdom will serve you well in every future business decision.

  1. You Know Who You DON’T Want to Do Business With

You’ve identified someone who operates with questionable ethics. This isn’t just about avoiding them in the future—it’s about recognizing the red flags and behavior patterns that signal similar problems with others. Your radar for unethical business practices is now finely tuned.

  1. You’re Now More Cautious and Will Perform Better Due Diligence

Moving forward, you’ll ask harder questions, seek independent verification, and invest in proper professional guidance. This increased caution isn’t paranoia—it’s wisdom gained through experience.

  1. You Have Proven Resilience

You’ve faced a significant business setback and you’re still here, still thinking about your next steps, still moving forward. That resilience is one of your greatest business assets.

The Truth About Early Business Relationships

Many business owners, particularly when starting out, want to believe that everyone operates ethically and conducts business in good faith. This optimistic view of business relationships is actually one of your strengths—it allows you to build trust, form partnerships, and see opportunities that more cynical people might miss.

The fact that someone took advantage of your good faith approach doesn’t mean you should abandon it entirely. Trusting people and operating in good faith isn’t naivete that needs to be eliminated—it’s actually a business strength that just needs to be balanced with proper verification. It’s much healthier to maintain your integrity and optimism while adding protective measures than to become cynical about all business relationships.

Here’s the real danger: allowing bitterness to take root. We’ve seen business owners get so consumed by past wrongs that they make reactive decisions rather than strategic ones. They either become paralyzed by over-caution or lose confidence in their judgment entirely. The goal is to channel this experience into wisdom rather than letting it fester into something that undermines your future success.

This Is About Them, Not You

Here’s something crucial to understand: You didn’t fail. You made a decision based on the information you had, and the other party was not honest in their business practices.

The problem isn’t your judgment, your business acumen, or your worth as an entrepreneur. The problem is that you encountered someone who operates without integrity. Their ethical failures are not a reflection of your business capabilities.

Moving Forward: Your Action Plan

Accept the situation. You can’t change what happened, but you can control how you respond to it.

Document everything. Even if you can’t sue, maintain detailed records of what occurred. This information might be valuable in unexpected ways down the line.

Share your experience appropriately. Consider leaving honest reviews, sharing your experience with relevant business networks, or warning others who might be considering similar transactions.

Invest in professional guidance. Whether it’s legal counsel, accountants, or business advisors, build a team of professionals who can help you navigate future decisions.

Focus on your next opportunity. Channel the energy you might spend on anger or regret into identifying and pursuing your next business move.

Trust your instincts. If something feels off in a business relationship, pay attention to that feeling. Your experience has sharpened your intuition.

You’re Stronger Than You Think

Facing unethical business practices and surviving without legal recourse is actually proof of your strength and resilience as a business owner. You’ve weathered a significant challenge, learned valuable lessons, and you’re still standing.

The business world needs people with integrity—people like you who operate ethically and expect the same from others. Don’t let one person’s poor character change who you are or how you approach business relationships.

The Bottom Line

Yes, you’ve been wronged. Yes, it’s frustrating that there’s no legal remedy. But you are not defeated, and this experience will ultimately make you a savvier, more successful business owner.

Every successful entrepreneur has stories of setbacks, bad partnerships, and expensive lessons learned. What separates those who succeed from those who don’t isn’t the absence of these experiences—it’s how they respond to them.

You will be okay. In fact, you’re going to be better than okay.

If you’re dealing with a situation where you believe you’ve been wronged in a business relationship, consult with qualified legal counsel to understand your options. Every situation is unique, and professional guidance can help you determine the best path forward.

I had an incredibly sobering conversation this week. It centered around an analogy that stopped me in my tracks—and I want to share it with you.

Imagine a Waterfall…

Now imagine your business is on a river. Some businesses are way upstream, paddling with confidence. Others are drifting closer to a rapid. And some—maybe more than we realize—are already going over the edge. The waterfall analogy is a clear picture of why we need to protect our businesses, “before the fall.”

Here’s how it breaks down:

Above the Waterfall: Calm Waters and Confidence

Many business owners are floating far upstream. They’re doing well—profitable, stable, and maybe even growing. They believe the dock they built will always hold, and the idea that something could “unmoor” the boat isn’t even on their radar. These owners aren’t looking for support—because it doesn’t feel like they need it.

Drifting: A Sense Something’s Off

Then there are owners who feel the current picking up. They know something’s not right. Maybe sales are slowing. Maybe they’re working longer hours, or cash flow is getting tighter. But instead of asking for help, they paddle harder. They’re thinking positive. They’re surrounded by messaging that tells them success is just around the corner if they hustle harder.

There’s a subtle taboo in the business world about saying:
“Something isn’t working.”

On the Edge: The Point of No Return

Some business owners are at the very crest of the waterfall. Everything feels chaotic. The team is stressed, money is tight, and decisions feel reactive instead of strategic. There may be one last chance to avoid the drop—but gravity is real. And unfortunately, many businesses don’t seek help until it’s too late.

At this point, the panic sets in. Some throw everything out of the boat—employees, marketing, even inventory—hoping to lighten the load. Others resign themselves to the fall, believing it’s too late.

At the Bottom: Soaked, Shaken, and Searching

Then there are the business owners I meet most often: the ones at the bottom of the falls. Soaked, exhausted, unsure what just happened. They’re looking for their oars, trying to figure out how to rebuild. 

And while I love helping them recover—crisis consulting is meaningful, life-changing work—I know in my soul my real mission is preventing the fall.

From Recovery to Prevention: A Shift in My Mission

For the last six years, nearly all of my clients have come from referrals—usually after something went very wrong. I’ve been able to help them stabilize, rebuild, and regain clarity. But I want to shift the conversation.  The truth is, there is a ton of shame that prevent business owners from seeking help. 

I want to reach business owners before the drift begins. Before the warning signs become a waterfall. Before an unexpected emergency or lawsuit takes them out.

Why Prevention Matters: Real-World Risks in Business

Let’s give credit where it’s due—the SBA, SCORE, and other startup resources do great work helping new business owners with plans, funding, and mentorship. But what happens after your business is up and running?

The real work begins. That’s when you need:

  • Key man insurance to protect your business in case something happens to you.

  • A clear understanding that unemployment insurance doesn’t cover owners.

  • Legal and HR systems that protect against liabilities.

  • Financial structure, compliance, and operations planning.

  • Strategic forecasting for capacity and cash flow.

If you’re in a state like California, employment law is one of the fastest ways a business can get thrown over the falls. An unexpected claim, a misclassified contractor, or a wage & hour issue can spiral into litigation, penalties, or worse. 

There are a lot of things in the market that business owners cannot control. Regulatory changes, disruptive products and services, employees leaving, etc.  BUT if we are allowing our ego (and shame) to prevent us from taking action with what we can control, we are potentially setting ourselves up for a trip over the falls. 

My Story: Why I Ring the Bell

If you’ve followed me for any length of time, you know the story of UNEQ, the company we lost in 2013 after my husband’s near-fatal accident. That moment changed everything. We didn’t have the protections in place. No safety net. No key person insurance. It wasn’t just a financial crisis—it was a personal one.

I’m not here to fear monger.

I’m here to tell the truth: We often wait too long to get the skills and support we need to run a business—not just start one.

If you’re drifting—or if you’re still tied to the dock but haven’t looked downriver in a while—now is the time. Not to panic, but to prepare.  If you’d like to chat with me about a legal audit of your business in California, just reach out for a consultation. 

 

*photocredit* Maspnet.com Photographer: Esperanza

Running a business without written agreements puts you and your clients at risk for misunderstandings, missed payments, and legal disputes. It’s especially risky in today’s landscape, where chargebacks (where clients dispute charges through their credit card company) can result in the loss of money even if your policy is “no refunds.” Without a written agreement, you’ll likely be forced to refund payments—regardless of your stated policies.

The truth is, contracts, or as I like to call them, business agreements, don’t have to be complicated, written in legalese, or span 20 pages to be enforceable. What they need to be is yours—clear, written in simple language, customized to your needs, and signed by both parties. When I say don’t “copy/paste,” I mean just that. Yes, you can follow templates, but don’t insert language you don’t understand just because it looks professional.  

*** Required disclaimer: This is not legal advice, meant for educational purposes only, if you have a contract matter- please discuss with an attorney***

Okay, now on to our discussion. 

Here’s what your agreements should include:

1. Be Clear and Keep It Simple

Nobody likes legalese—trust me, nobody. Skip the formal jargon. If the agreement is for six months, say that directly. If there are four monthly payments, spell that out. People want clarity, and your agreement doesn’t need to be fancy to be enforceable. In fact, you can have a legally binding agreement on a napkin (there’s a famous case about this!). But, for professionalism’s sake, keep it concise and clear.

2. Use the QTIPS Framework

To ensure all bases are covered, use the QTIPS framework to guide you in writing your agreements:

  • Q: Quantity (6 sessions, 2 products, etc.)

  • T: Time of Performance (15 days, 6 months, etc.)

  • I: Identity of the Parties (Who’s involved? You and your client? Identify them!)

  • P: Price (What is the cost of the services/products?)

  • S: Subject Matter (What are they buying? Coaching? Products? Services?)

With this in place, there’s little room for confusion. For example: “This agreement between Me and You is for six 30-minute life coaching sessions over six weeks for $350.” All terms are clearly laid out.

3. Spell Out Your terms

This is a common area where business owners often leave gaps that later create headaches. If you have a no-refund term, write it down. If there are time restrictions for rescheduling (e.g., within 48 hours), state that upfront. Similarly, if you require deposits, payment in full before certain services, or have any other terms, include them in your agreement.

It’s far better to have customers review your contract terms before purchasing, rather than dealing with disputes later. Trust me, it’s less stressful to turn someone down upfront than to face a chargeback down the line.  And without getting too legally for you, we often treat policies and contract terms as different. 

Generally, we describe policies as applying to everyone equally in your business, regardless of the products or services they contract for.  “Our policy is to require 48 hours’ notice to change an appointment.” But a contract is between you and the other party specifically (QTIPS). You can negotiate a term. “I’m requesting the option to provide 24 hours’ notice to you due to the nature of my business.”  That term can be negotiated in an agreement between the two of you. 

So, if you are relying on your websites’ policies to fight a chargeback or otherwise prevent a refund, and it is not a term in the contract, there might be some stickiness with certain payment platforms or credit card issuers.  Please check with an attorney if you need guidance in this area. Us lawyers had weeks and weeks and weeks and weeks of law school and legal cases to read (I know, I’m exaggerating, or am I?) on the exciting world of contract terms. Exploring the exotic world of, “what terms are included in this scenario? That one? Is that an Oxford comma?”

4. Get Any Changes in Writing

Changes will happen. Whether it’s a change of schedule or an amendment to services, always get the changes in writing. Even something informal like, “We’ve agreed to change the dates for yoga sessions” should be clearly documented.

At a MINIMUM send an email documenting the changes to the agreement. You can send an, “I’m just following up our phone conversation with this email to ensure we have everything clearly documented……”  At the end of the email., “If you see something I left out or need to change, please hit reply and let me know.  It was great speaking with you earlier today.” Please do this as you get off the phone- not two days later. If you know that you will not get to it right away, have excellent notes. 

Even better? Send over the changes in a separate document, and you both sign.  Create a word document, send it to the other side, once it’s absolutely captured the changes, make a .PDF, send for signature or e-sign. As much as possible, keep everything signed and dated to avoid confusion.  Don’t rely on memory or scribbles on your notepad—put it in a formal writing!

5. Be Prepared to Enforce the Agreement

This part of business isn’t easy, but it’s necessary. You have to be prepared to enforce your agreements if the need arises. In my own business, I allow clients to pause services for a month or two if life happens—but we don’t just “cancel” agreements because life got in the way. We finish what we agreed to. My livelihood depends on it, and your business should be treated with the same respect.

You may never need to enforce an agreement, but if it comes to that, be firm. Ensure your agreements are followed and recognized.

6. Get Professional Legal Review for Complex Agreements

For more complex agreements, like buying or selling a business, purchasing or leasing equipment, or drafting partnership agreements, always consult an attorney. These types of agreements often involve significant risks, and it’s essential to get them right from the start.

If you can’t afford a full-time attorney or don’t want to hire someone long-term, there’s an excellent online resource called Contracts Counsel. This platform allows you to hire attorneys on a project basis to review or draft legal agreements tailored to your specific needs. It’s an affordable way to ensure your legal documents are in top shape.

A Final Note

While hiring an attorney may seem like an extra step, it’s an investment in the long-term stability and success of your business. Having a clear, legally binding agreement not only protects you but also gives your clients peace of mind, knowing that both parties are aligned in terms of expectations. Don’t let a misunderstanding or poorly crafted contract harm your business—take control of your agreements and protect your interests.

For California Business Owners

If you’re a small business owner in California and need help reviewing or drafting your contracts, I’m here to help. Reach out for a consultation, and we’ll ensure your agreements are legally sound and protect your business.

In the wake of the pandemic, many businesses had to pivot, and for some, the decision to close their doors can feel like a failure. We’re conditioned to think that shutting down a business is a sign of defeat, but that’s simply not the case. Closing a business can be a power move—one that allows you to cash out of something you’ve built but that no longer serves you or your goals.

I’ve been there myself. As a serial entrepreneur, I’ve voluntarily closed businesses that were no longer in alignment with my family’s needs or my personal vision. It’s a decision many entrepreneurs face, and while it can be difficult, it’s often the smartest choice in today’s fast-changing economy.

Why Closing Can Be the Smartest Move You Make

Today’s economy looks vastly different from even just a few years ago. The pandemic changed how we do business—what we need, how we operate, and how we connect with customers. And while many businesses are thriving post-pandemic, others have struggled to adapt. Smart entrepreneurs know when to walk away and realize that closing is a way to preserve energy, financial resources, and personal well-being. Holding on for the sake of obligation or emotion can quickly lead to financial distress, burnout, and unmanageable stress.

Here are a few instances when closing a business can truly be a power move:

1. The Market Changed, But You Don’t Want To

Back in 2018, I closed my business, At the Ready Publications, LLC, which published “The Online Magazine for First Responders.” Initially, the market for niche online publications for first responders was strong, with a unique position as a free, digital magazine targeting rural areas. But over time, larger competitors entered the space with more robust offerings, bigger subscriber lists, and stronger sponsorships.

In 2019, two of the biggest players in the industry decided to go fully digital, and it became clear that competing for attention in this crowded, high-resource space wasn’t the right move for us.

So, we closed up shop, cashed out, and dissolved the company—without regret. Recognizing that the market had shifted and that we no longer wanted to compete in that arena was an empowering decision.

2. Your Client’s Needs Changed and Your Business Has Run Its Course

When a business is solving a problem, it can thrive for years. But what happens when the problem is solved or when customer needs change? One of my ventures, Dragon Slayer Tutors, supported law students with the unique challenge of preparing for the “Baby Bar” exam in California. My niche was law students, particularly working adults with families, navigating the challenges of law school.

In 2020, however, my alma mater’s accreditation changed, and the state bar removed the requirement for students to pass the Baby Bar. As a result, my business model became obsolete almost overnight. Additionally, many law schools started offering fully accredited online law programs, so the landscape on online legal education changed significantly, and many law programs offered remote tutoring and study opportunities. 

Rather than fighting to keep it alive, I recognized that my services were no longer needed by the market, and I stepped away. Instead of feeling bad about it, I was thrilled that my clients no longer needed this particular service. Letting go was a smart decision, not a failure.

3. The Business No Longer Serves You

As a business owner, you are the master and commander of your company. You decide what your business looks like, who it serves, and how it operates. But what happens when the business no longer aligns with your lifestyle, goals, or passions?

I’ve seen many business owners, including a boutique owner and a restaurateur, close their businesses simply because they weren’t having fun anymore. Maybe they’ve outgrown their original vision, or the financials have changed, making the venture no longer profitable.

In some cases, it’s a desire to regain work-life balance—perhaps taking a step back to focus on family or stability, such as returning to a traditional job for health benefits. This can feel difficult, especially in a culture that promotes relentless hustle. But closing a business to align with your personal goals is a power move.

4. Your Business Evolved Into Something Else

Businesses, like people, are meant to grow and evolve. And sometimes, that means closing down one venture to give way to the next.

In my own business, I’ve evolved from solo law practice to a 2-attorney firm practice, now back to solo practice and have refined my areas of focus over the last ten years. I no longer practice as much administrative law, mostly small business.  While it feels like a significant shift, it’s not a failure—it’s an evolution. 

This is something I see regularly with other entrepreneurs as well. As the markets change, we need to change. Law professionals change areas of practice.  Caterers offering a takeout meal service every week.  A previous career coach becoming an HR Consultant. A jewelry designer adding on a brand management service for other designers. Instead of seeing these evolutions as failures or “closures,” let’s start normalizing them as growth.

Changing the Narrative: Closing Isn’t Failing, It’s Evolving

In today’s economy, where so much is in flux, understanding when to pivot, close, or evolve your business is more important than ever. It’s time to embrace the idea that closing a business doesn’t signify failure—it can be an empowered decision that positions you for the next chapter of success.

So, let’s normalize closing a business as a power move. Rather than seeing these transitions as negative, we should celebrate them as evidence of adaptability and growth. As entrepreneurs, we don’t have to cling to the past; we can create the future.