by Chris Way
Of the many aspects of small business governance, perhaps none is treated as more of a formality, tedious chore, or “we do this because we have to” uninspired task than keeping minutes of meetings. This is particularly the case where a business with a single owner has elected to be taxed as an S corporation, triggering the IRS’s requirement to observe corporate formalities, including keeping minutes of meetings. For many business owners this can feel very silly. If I had a nickel for every time I’ve been asked some variation of “You mean I need to take minutes of meetings… with myself?” I’d have… around $14!
The short answer is yes, you do need minutes. And yes, this may feel silly when management is a small group or a single person. But I have a different perspective.
Keeping minutes of meetings, including meetings just of yourself, are an important opportunity to seize. Minutes serve three critical functions, particularly when you are in business a solo owner.
What Benefits Do Minutes Provide?
Understand Your Why
First, minutes allow you a chance to reflect on your reasons for doing something. When you take the time to write out why you are doing what you are doing, you are better able to see any flaws in the plan. By writing out your reasoning you can more easily spot gaps in your reasoning. Gaps in your reasoning will translate to gaps in your strategy. With these gaps your strategy either will not produce the benefits you were expecting, or you yourself will not be able to fully pursue the strategy because you will be tripped up by an unaccounted-for landmine at some point in the future. Taking the time to write out your reasoning will give you a more complete plan.
Create Institutional Knowledge
Second, writing out your reasoning preserves institutional knowledge. I don’t know about you, but I can’t remember what I had for lunch or what shirt and pants and combo I wore on any particular day two weeks ago. The farther removed you get from a business decision, no matter how large that decision is, it will eventually fall from your memory and suffer the fate of your outfit three Tuesdays ago. Once your company has lost institutional knowledge on the reasons for a particular action, your company no longer has a complete understanding of the purpose of the action. A year from now, you, a partner, or an employee may unknowingly end a program that was beneficial to your company because no one knew the purpose of it or how it fit within your larger company goals. You can avoid this outcome with minutes describing why you’ve undertaken this action.
Third, writing out your reasoning allows you to establish benchmarked goals so you can compare future performance to the expected results. You can then easily determine if this move was worthwhile, needs any corrections, and so on. By seeing where you hoped to go you can more easily determine if you’ve gotten there.
Small business owners tend to avoid preparing minutes because they feel minutes are either tedious to keep or overly formal. This doesn’t need to be the case. Phrases such as “Witnesseth”, “Whereas” and more, aren’t necessary for good minutes. Your business’ minutes don’t need great grammar. They don’t need formal statements. They really don’t even need complete sentences. They just need to express an idea clearly enough that you and your team can follow them. For major actions based on minutes, your lawyer can help you fancy these up into a resolution that consolidates ideas into a short, succinct statement authorizing whatever company action is needed to follow up on the items described in the minutes.
How Do I Write Effective and Easy Minutes?
Write the date, write the ideas and reasoning, and put it in the company’s minutes folder. That’s it. You’re done. IRS satisfied, and more importantly your internal knowledge needs satisfied.
Every decision you make should have solid reasoning behind it that you understand. Your minutes allow you the opportunity to make sure you have great reasoning, that you understand it, and have it recorded to look back on. With this outlook you can transform your minutes from a tedious task to a valuable planning tool.