Are You Properly Staffed?

Does your company have a solid infrastructure of qualified personnel? Specifically, does your company have the personnel who can handle the application process as well as the reporting and regulatory requirements of a publicly held company? There are many very profitable small businesses that are still run as mom and pop operations with “seat-of-the-pants” management style.

Many businesses do not have a bookkeeper, let alone a chief financial officer (CFO). They chiefly rely on their CPA to prepare annual tax returns and annual unaudited financial statements. This will change drastically if you become a public company.

The Securities and Exchange Commission (the “SEC”) mandates that you file quarterly financials and have your books audited at the end of each year. And, by the way, if you do not file by certain deadlines you could end up having your companies stock delisted from the stock exchange you are trading on.

The company that decides to go public must hire key personnel prior to finalizing their IPO. The CFO position is just as important today as the CEO position. With the introduction of Sarbanes Oxley (“SOX”) Legislation in 2002 the rules have changed. The CEO and CFO must both certify the financial information of the company and verify that there are adequate internal controls in place. If something goes wrong and the SEC finds you weren’t exactly truthful or forthcoming with your disclosures then you could end up in jail. That is why it is so imperative to surround yourself with competent, trustworthy individuals. The wrong crew can get you into hot water fast. Remember and live by this motto “Don’t Expect What You Don’t Inspect”.

What this translates into is that you have to take a good, hard look at your current employees to determine who will stay and who will go. This is where the rubber meets the road. It is very difficult to get rid of long time faithful employees or family members that you have been carrying for years. Are you prepared to fire those individuals that would be a deterrent to you in a public company setting?

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