S&L Business Breakdown is a four-part weekly series featuring candid Q&A’s with the business attorneys of Stock and Leader on the life of a business from formation to expansion and everything in between.
So, you’ve started from scratch and your business concept has really taken off. What’s the next step in growing your company and brand?
Expansion, of course!
Check out what Attorney Ron Hershner had to say about moving your company to the next level.
What advice would you give to a business owner who is considering expanding their operation?
- Devise a business plan with a horizon of at least three to five years.
- Develop a relationship with a trusted, but independent, business advisor, and listen as he or she critiques your plan.
- Give thought to the exit as well as the entry.
Some of the best advice I’ve heard from a successful business client – “whenever you go into a new venture devote time to planning how you will get out if things do not go as planned.”
What are the biggest legal challenges for business owners seeking to expand?
- Raising the needed capital without losing control.
- Delegating responsibility to others and empowering others to make decisions.
- Protecting existing assets from adverse consequences.
What are important business considerations for business owners looking to acquire another company?
- Control the deal and be willing to walk away – the less bargaining power you have the worse deal you will make.
- Stick with what you know how to do, many successful businesses are lost because they had to support the losses of a bad deal.
- Kick the tires – twice – do as much due diligence as you can. You don’t want any surprises after you own the new business.
Are there any specific financing considerations that business owners should be thinking about during the expansion process?
- Don’t over-leverage your business.
- Give the lender only the collateral you need to give to get the loan.
- Low rates are important but relationships and trust are even more so.
- Always, always have a strategy for the worst case.
Missed the last installment on risk management? Read it here.