Perhaps your business has been running smoothly for some time, or you have just discovered an opportunity that has too much potential to pass up. Whatever the cause, your company seems primed to grow. How though do you expand your business without risking the solid foundation you’ve worked so hard to create? A business attorney can help guide you through a responsible business transaction and all the other milestones that allow your company to grow.
Review the Current Conditions
Before moving ahead, take a good look at what’s working for you right now. Ask yourself:
- What is our current mission? How will this change fit in with our core identity as a business?
- Who are our customers? How will they benefit from this change? Will there be a negative impact on our current customers if we grow?
- Can our current staff handle this growth? Will we need to hire new people with different skill sets, or can we train and promote from within and use this as an opportunity to reward good performers?
- How will this work with our suppliers and vendors? Will we still be able to use their services? Will we be in competition – either directly or indirectly – with them?
- Do we have any significant weaknesses we should address first? Remember: small fissures develop into large cracks under pressure, and growth almost always creates pressure.
Check and Double-Check Your Financials
Growth almost always requires an increase in cash flow. How will your company manage that? Aside from the initial cost associated with an acquisition or developing a new product or service or opening another location, how will your expenses increase overall? Will you bring in employees a few at a time or will you need a large number from the outset? Hiring and training new employees, paying for salaries, taxes, and benefits will be an ongoing additional expense. Providing IT and administrative support to additional staff or across multiple locations will also increase your expenses. Tax considerations will also factor in growth that takes you into a new state or country. When you are certain that every potential cost has been accounted for you will be better able to estimate your company’s ability to handle the financial impact.
Evaluate Your Infrastructure
A few years ago, a study of high-growth private companies revealed that the people, processes, and controls that worked at earlier stages of the business life cycle often failed to work when the business grew substantially. Growth adds bureaucracy and complexity to any business, and this adds stress and cost to the equation. It can also become time-consuming as processes, software, and equipment become bogged down or fail altogether and staff time has to be devoted to resolving infrastructure problems instead of focusing on the original plan for growth. Before deciding to move ahead, ensure that your company can handle the additional stressors or build in additional time, money, and resources in anticipation of business needs.
Consult with a Business Attorney
Before moving forward with any expansion or acquisition, it’s essential that you run it by your trusted corporate attorney. Their expert help will allow you to revamp key documents such as partnership agreements and corporate bylaws, avoid business litigation, and uncover potential pitfalls that could hurt your business in the future.