Our law firm recently met with a client whose business was rapidly expanding. The business, which provides a unique service to busy, upscale clientele, was ready to add staff and expand into cities across the nation.
The unique nature of their services attracted interest from a wealthy investor.
Realizing the company was at a significant crossroad, the CEO sought strategic legal counsel. This move improved the company’s chances of a successful expansion.
Many small business owners spend a lot of time reacting to day-to-day issues, but overlook the importance of opportunities at critical junctures. It is very important to put similar thought and energy into expansion, just as it was put into launch. Proper legal planning before expanding your business is often the difference between success and failure.
Here’s a look at 3 key legal issues that must be considered for safe and successful business expansion.
Create a strong legal infrastructure
First things first, make sure your business has a legal infrastructure capable of expansion. Every successful business needs a solid legal plan and strong legal documentation. Legal infrastructure refers to your formation documents, organizational documents, employee agreements and vendor contracts.
Confirm that the current management has the knowledge and skills needed to take your company to the next level. If not, hire an interim team to remedy any weaknesses in your legal infrastructure and create an appropriate capital expansion plan.
Ensure maximum protection
Next, put procedures in place so that you and your business are protected. Your intellectual property should be protected. Intellectual property consists of everything you’ve created that is unique to your business. It provides economic benefit unique to your business and organization. This includes patents, trademarks, copyrights, logos, designs and trade secrets.
It is essential to have a lawyer draft non-disclosure agreements (NDA’s), shielding your ideas, unique assets and enforcing your rights if violations occur. You must also protect your business from future lawsuits. Have a lawyer review your contracts, staffing and business plans. Without these protections in place, a disgruntled partner or employee could wipe out everything you worked for, along with your reputation.
Make your business attractive to investors
Finally, make yourself more appealing to investors by looking at your corporate debt and equity. Then consider restructuring, if necessary. Part of the reason U.S. retailer Sports Authority had to file for bankruptcy earlier this year was due to its heavy debt load.
You’ll need a comprehensive legal strategy to support your business goals. You will also require proper legal advice to keep owners, employees, and investors content and motivated.
Expanding a business requires as much blood, sweat and tears as it takes to start a business. With the proper team, planning and strategic advice (business and legal) you can minimize risks and create an environment more conducive to success and expansion.
This article has been edited and condensed.
Taylor Louis LLP is a boutique financial and business law firm offering expertise in several specialty areas, including financial and business structuring, derivatives and financial trading, lending, project finance hedging, risk analysis, and complex financial and security arrangements. They also recently launched a highly specialized entertainment law practice. Their client base is comprised of start-ups, mid-market business and financial entities, and high net worth individuals. Connect with @taylorlouisllp