Hi,
Our large sale scenario has taught a number of lessons. The first and most important is that there are some events too large to be practical and are better left under the control of an individual ENTREPRENEURSHIP, (SOLE PROPRIETORSHIP). It is often extremely LABOR INTENSIVE with small gain to include a large group.
Our event as set up was able to create a small profit for the SHAREHOLDERS but mainly simply relieved them of their "junk". Everything went as scheduled but because of unanticipated expenses, the parking was not addressed and that was our second mistake since we were cited for creating a nuisance and may be fined (COST OF DOING BUSINESS).
The complaints from SHAREHOLDERS were so many that it required a "closing operations" meeting to deal with all of them. Luckily, we discovered that we had a lawyer in our SHAREHOLDER group to deal with a new financial question. Mr.X's copy of a contract (I should have known better) failed to cover a number of contingencies, important among these was a lack of agreement on clean-up.
Our COO claimed a large extra fee for overseeing and assisting the cleanup necessitated by visitors as well as participants. We thought this would be included automatically and we were wrong. A good contract would have clarified this issue. The lawyer NEGOTIATED (BARTER is back) with the COO on the additional cost and saved us money and a possible lawsuit that Mr. X's stubborn guilt might have caused when he got infuriated by the COO'S claim.
I grant you the COO could have anticipated and should have mentioned cleanup since he was our expert but we should have known that "the buyer must beware" or in this case "be aware". The SHAREHOLDER lawyer did our legal problem PRO BONO (Pro Bono Publico: Latin for the good of the public. A charitable service by lawyers). If he had charged us, more PROFIT would have melted away from an already high COST OF DOING BUSINESS.
We also learned that hiring an "expert" is a two edged sword and must be seen as such. We allowed the fact that he was taking charge lessen our feeling of responsibility and depended solely on his direction. Letting someone else take charge of the business and money (VENTURE CAPITAL) without constant oversight either through a lawyer or a CFO (CHIEF FINANCIAL OFFICER) is very foolish. Since our large yard sale was actually a very small business, a CFO would have been overkill but checking our SHAREHOLDERS for legal help would have certainly been appropriate.
The many details and unforeseen problems in the setup of the new company illustrates how and why finances become Economics. This is a seemingly simple and workable idea for an INDIVIDUAL or even a Partnership. However, expanded into a company with a board, shareholders and employees, it becomes a maze through which an organization must weave a path. In a LITIGIOUS society (people who settle problems by hiring an expert IE:lawyer instead of private negotiation or because of failed negotiation), legal problems must be foreseen and appropriate measures taken to protect the company.
As creative solutions to the myriad problems that occur become part of the fabric of doing business, ECONOMICS is formed. Larger companies become corporations and multiple large companies in a corporation can form into a huge success (like Walmart). Trade interaction between the many corporations are complicated by additional elements not included in our examples. Add to that a larger body of business in recent years called GLOBAL trade between nations and the complexities multiply.
Remember these yard sale examples are fables so if I have skipped some element in the object of brevity, let it go unless it is an important issue to our main subject.
We'll leave the yard sales behind us and promote our COO, whose business experience has increased two-fold, to head a CORPORATION (a company under legal safeguards). As CEO (CHIEF EXECUTIVE OFFICER. He plans to TAKE PUBLIC (allow open share buying to raise more CAPITAL for EXPANSION) the company on WALL STREET (a term used to denote the United States financial hub in New York City housed on Wall St.) with an issuance of SHARES (based on capitalization-MONEY PLUS MATERIAL GOODS) and known as STOCK (the SHAREHOLDERS become STOCKHOLDERS along with any others who now choose to buy into the company) so that it becomes part of the advertised STOCK MARKET or what is commonly called WALL STREET.
Cheers, Connie
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