As we head into 2023, we finish out a third year of rapid change in our world. In 2020, the pandemic raged through the United States and around the world, upending nearly every aspect of how we work and live. In 2021, we began to fully realize the shifts in the workforce as people resigned at unprecedented levels, in many cases also moving to different areas of the country for new opportunities. And 2022 saw a sustained attack on Ukraine by Russia that not only devastated millions in that region but further exacerbated global supply chain disruptions. For business of all sizes and stages, the only constant has been change. The best preparation at this time is knowing who you are, and where you want to be. One place to start is to review all major contracts — or areas where you may need contracts – in light of the present environment.
Does your lease reflect your reality? No matter where your business is based, there’s a good chance the real estate market has moved significantly in the last few years. But do you know in which direction? And does your lease protect you? Some higher cost of living areas like Los Angeles and New York City have seen a (modest) decline as workers moved elsewhere. At the same time, the real estate market has seen demand surge in areas of the country previously enjoying only modest growth, or even decline. If you lease your property (or multiple properties), review how much the rent can be raised in any one year before you are blindsided by the growth. On the other hand, if you are a landlord or sublet some of your property, now might be the time to take advantage of that increase yourself.
It’s still a job seeker’s market – employment agreements are key. While The Great Resignation has slowed, the demand for employees is still outstripping the number of workers available. So when you do make a new hire, consider an employment agreement that will reward loyalty. That could mean a retention bonus, a guaranteed cost-of-living increase (this obligation can be tied to the consumer price index or another specific indicator) or other compensation-based incentive. But don’t underestimate the value of less traditional benefits to attract and retain new hires. According to one study, 48% of workers who left a job in 2021 said it was due in part to childcare issues, and 45% of the same group also cited lack of flexible hours as a major reason.
Whether you are hiring someone new, or giving raises to current employees, consider issuing new agreements that add protections for the company. For example, can you add a non-compete or non-solicitation clause to your employment agreements? In such a competitive workforce, you not only have to work harder to hire and retain employees; you want to make sure that the ones who leave take little more than themselves. Review employee handbooks and individual agreements not only to protect against taking people (employees, clients or both) but also your IP or other knowhow. In all cases, it is important to work with your legal advisors because the enforceability of such provisions vary from state to state.
Risk management has become more complicated. The multiple dynamics we are facing in today’s corporate climate also make unexpected events more likely than in the past. Review all of your insurance – everything from property insurance to D&O policies to your provider agreement for your employer-sponsored coverage. Ask yourself other hard questions now to test for gaps in your protection — we have just been through a devastating pandemic, and we see once-in-a-century weather events almost annually. What happens if a principal suddenly passes away? What is your current coverage if a natural disaster has a catastrophic impact on a warehouse or retail location? Unfortunately, these are the types of scenarios worth preparing for.
A new corporate landscape could means new acquisition opportunities. The advantages of being a large, global organization are easy to articulate. Things like purchasing power, name recognition, large scale impact, are just a few benefits of being a multibillion dollar brand. But private, closely held companies can often leverage a more modest footprint by exercising their agility. Being nimble in a time of constant flux can help you experiment in new markets or with new products. You may be able to more quickly scale up or down operations – now is a time to see if there are opportunities for organic growth or a strategic acquisition to expand your footprint. Similarly, what you lack in purchasing power you may gain in your flexibility among suppliers. Is now a time to switch to someone new – or even become your own supplier by acquiring a business for a vertical integration?
The online market is hotter than ever. But so is buying local. Can you attract new customers? Every business should ask this constantly. But again, the market may have created new opportunities in recent years. Younger consumers often prioritized buying local, or supporting companies that reflects their values – 50% of Gen Z and 41% of Millennials prefer companies whose social beliefs align with their own. This can favor a private business with 1000 or fewer employees and tied to the community, as much or more than a global one with 30,000 employees. However, it’s also time to review your online opportunities more generally. There is hardly a market segment or consumer demographic out there that hasn’t seen online buyer growth during the pandemic. Review your internet presence (e-commerce site, social media channels, digital marketing strategy) and look for new ways to connect. And make sure your contracts with online partners set goals that reflect these new opportunities.
During times when markets are in constant flux, knowing your legal landscape is key.
Whether you are a newer organization that was just getting established when the pandemic hit, or a generations-old company with established processes and policies, it is time to review all your key agreements. Lastly, make sure you actually have signed, up-to-date contracts – the world doesn’t operate on handshakes anymore. This includes agreements that were executed but haven’t been updated formally. People pass away, sell their business, or go bankrupt. The best way to limit your exposure and leverage your strengths is to identify them, and legally protect them.