Thursday, March 11, 2010

Creative Connections Trade Show, March 25, 2010 at Colorado Community Church, 3-7 pm

I’ve been a part of Creative Connections for over a year now, since when they used to meet at the Koelbel Library on Holly and Orchard.  I’ve even had the privilege of presenting to the group on topics like Intellectual Property 101 and Independent Contracts.  The group features creative professionals like digital and print designers, marketing consultants, artists, web developers, copywriters, film and video producers/editors, screenwriters, and more.

Brochure pic

This coming March 25, 2010 from 3 pm to 7 pm, the group is having its second annual trade show where members set up booths to show the public, and hopefully interested businesses, their products and services.  I will be hosting a booth at the trade show and hope that you might stop by to see what me, and my friends, are doing.  It looks to be a great chance for businesses to get some insight and ideas into using creative media to augment business.  And of course, I will be there to talk with, and to help businesses as they take advantage of intellectual property resources.

The event is being hosted at Colorado Community Church, just south of Hampden on Colorado Blvd.  There will also be speakers and presenters on topics of interest related to the value of creative media to businesses.

Come on over and meet with your friends at Creative Connections, this Friday at 9:00 AM, at Colorado Community Church, just south of Hampden on Colorado Blvd. As always, it’ll be friendly, informative and fun!

Wednesday, March 10, 2010

Slowing Down Can Save You

Some people are snails and some are risk adverse.  However, it isSnail unlikely that those people are very successful in running businesses.  

Business leaders tend to see what is going to happen before others.  A successful friend of mine in the nonprofit world suggested that this is what it means to have vision.   But in addition to seeing what is ahead before others, they act on it swiftly.  They are first to market, first responders, first to invest in appreciating stocks, etc.  

Being able to be successful involves a combination of vision, speed, and risk management.  As a result, it seems that more often than not, a successful business leader’s default speed is full throttle.

It is for those business leaders that the admonition to slow down can be very important. 

There is a difference between going quickly in order to take advantage of benefits which will disappear as time goes on, and moving quickly because one has developed the habit of moving quickly in situations where the benefit is reducing as time moves on.  One is a sense of urgency based on a cost/benefit analysis, the other is a psychological condition.

It may seem obvious in some situations, like one should not market a new tech device without first getting intellectual property rights in place .  But other situations, or even certain details, may be less obvious.  For example, carefully reviewing real estate documents as well as carefully surveying the physical property before a purchase can result in catching issues and problems such as neighbor encroachments, unrecorded leases, and so on.  Furthermore, what may seem obvious to one person, may not have occurred to others.  An example is whether a particular person should be the CEO of the company—it may be the obvious end result to the business leader, but getting the pieces in place to facilitate the transition, getting buy in from other key players (including the candidate), and providing the right atmosphere for success, may require time.

The CEO example also highlights the fact that no one is operating in a vacuum.  Any time we act, as individuals or businesses, we are affecting others, some who have a say, others who do not, and many in between.  Managing these relationships is not easy, and can substantially slow down the business process.  Ignoring these relationships can be devastating.  Addressing them is an investment. 

Capital Do Not Enter (small) Politics is an example of this sort of relationship management, in some cases, run amok.  For example, when I worked in DC, I remember one Congressman in a key Committee Chairmanship expressing less than genuine doubts about certain legislation important to the President simply to get the President to call him. 

Politics is simply a large scale example of what goes on, whether we like it or not, in business all the time, i.e., the exercise and sharing of power.  The Founders put in mandatory checks and balances for the specific purpose of SLOWING THINGS DOWN where there was the exercise and sharing of the most power.  Likewise, in business, we should consider the value of slowing down to make sure what we are doing really makes sense, is really for the good of the business overall, and to manage the relationships.  In fact, it is often in taking the time to manage the relationships that we get the unique insight from other people as to what really makes sense, and what is really good for the business.

If people really are our best resource, let’s take the time to consult them, consider their input, and use them.

Wednesday, March 3, 2010

Remember, Best Intentions Often Not Enough

Business people need to keep in mind that many of the activities that can get them and/or their business into trouble do not have an intent requirement.  That means, you do not have to have a bad intent to get into trouble.  And on the flip side, having good intent does not earn you a pardon.

This is important because in the rush of business, when opportunities or decisions present themselves, the same focus and decisiveness that make many business people successful, can also be their undoing.  Focus, taken too far, ignores outside factors and potentially interested parties.  Decisiveness then moves quickly down the path which is informed by the information available.  Combined, a business leader can make quick decisions on limited information ignoring potentially important concerns because of the good that is expected to come out of acting on the information the leader does know.

Therein lies the rub. 

Business leaders may try to comfort themselves during the mad rush of business decisions with the belief that good intentions, in combination with their business sense, will get them through unscathed.  However, often, in business environments where there are many interested parties, and decision makers can have multiple persons to whom they are responsible (shareholders, Board of Directors, Members, executive officers, employees, etc…) the question may not be whether one is trying to do good, but whether one is taking care of certain people to whom they have some responsibility, or whether one is making reasonable efforts to avoid doing harm to someone.

As a result, good intentions are not enough.  In addition, business leaders need to make sure that their good intentions are in harmony with their other responsibilities and duties they may have.  In short, business leaders need to keep in mind all of the various parties and persons who might be interested, tempering their good intentions in the moment with full consideration of those persons and parties “not in the room.”

Tuesday, March 2, 2010

New Colorado Case Says Members and Managers of an LLC are Directly Liable to Creditors for Excessive Distributions

Under Colorado Revised Statute (“CRS”) Section 7-108-403, a director of a corporation who agrees to a distribution that prevents the corporation from being able to pay its debts is personally liable to the corporation for the extra amount.  But in addition, Colorado courts have determined that creditors can proceed against the directors who make the distribution in a lawsuit to recover the excessive distribution.

Colorado Developments Regarding LLCs

Now, the Colorado Court of Appeals in Colborne Corp. v. Weinstein, 2010 WL 185416, No. 09CA0724 (Colo. Ct. App. Jan. 21, 2010)(link here), has held that, by analogy, limited liability companies (LLCs) are under the same basic rules.Take Money Hand

Specifically, under CRS Section 7-80-606 Members of an LLC are liable to the LLC for excessive distributions knowingly made to them.  In the Colborne case, creditors sued the Members and Managers of an LLC under Section 7-80-606 asserting that the Members and Managers should also be liable to the creditors, not just the LLC, for any excessive distribution.  The Members and Managers of the LLC argued that the statute only allowed the LLC to recover from them, not the creditors.  While the lower court agreed with the Members and Managers, the Court of Appeals has now stated it agrees with the creditors, and has sent the case back to the lower court for more proceedings.  Accordingly, the creditors are being allowed to bring a case directly against the Members and Managers to hold them liable for the excessive distribution.

Conclusion and Summary

On the down side, this does mean that LLC Members and Managers cannot hide behind the LLC entity if they give themselves all of the money from the LLC through a distribution without paying off their creditors. 

However, there is also a lot of upside.  First, if the rule prevails that the creditors can proceed against Members and Managers for an excessive distribution, creditors will be more likely to lend money to such entities knowing that they will have some recourse if the Members and Managers start making large distributions that could deplete the LLC’s ability to pay them back.  Second, as the LLC statutes are tested in court, and the court’s analogize more with the corporate law which has been around longer and already been tested more, the LLC law becomes more stable and predictable.  This lowers the risk and potential cost of creating and running a successful LLC.

Overall, the case suggests the courts in Colorado are heading in the right direction regarding the responsibilities of the Members and Managers of LLCs.

Monday, March 1, 2010

Proxy Voting is limited in Colorado for Directors of Nonprofits

Under Section 7-128-205 of the Colorado Revised Statutes, a director of a non-profit, if allowed by the Bylaws, may make a written proxy directing another director to vote a particular way on a particular issue.  If this is done, the director is deemed to be present for purposes of quorum, and the vote is taken according to the direction of the written proxy.  However, the proxy is only good for the specific issues identified in the proxy, and the authority is only to vote as directed by the proxy.  No other proxy voting is allowed by a nonprofit director.

For a corporation, there is no similar statutory provision for directors to vote by proxy.  Accordingly, under the quorum and voting statutes for a corporation, it does not appear that a proxy vote by a director is allowed.

If you’re on a nonprofit board, remember this proxy rule so that the decisions of your board are legitimate and can be documented appropriately.