Key Stages of Business Growth: Getting it Right First Time
HM Magazine 5 looks at key stages of business growth from hiring your first employee to handling disputes. Below are tips on getting these stages right first time.
Right 1st time: hiring your first employee
Once you are ready to hire your first employee, take the necessary steps which include staying on the right side of the law. First, remember that you are growing (potentially doubling your workforce if you are working on your own) and about to become an employer. Regulatory steps include registering with HMRC and getting up to speed with legislation on hiring and firing. There is a wealth of information available but also consider speaking to an employment law expert if you have any questions specific to your business. It will be a good investment in the long term.
Of course hiring works both ways. Make sure it is clear about how the new role fits into your business, what changes the new responsibility will bring and what you expect from your first employee; expanding your business is also a great opportunity to share your ambitions with someone else.
Right 1st time: planning to sell your business
If you are planning to exit the business seek professional advice as early as you can, before looking for a buyer and beginning marketing. If the necessary steps are not taken to get the business ‘oven ready’, then the price will be adversely affected. Well prepared succession planning takes at least a year and will maximise your return. Preparation includes a legal audit, making sure compliance and due diligence are covered. Contracts should be watertight for employees and suppliers, leases, policies and maintenance agreements etc.
We advise clients that planning can never start early enough; by doing so there will be no ‘skeletons’ to uncover to reduce the sale value of the business, costs can be managed over a longer period and be more tax efficient.
Right 1st time: leasing commercial property
It is recommended to get professional advice before signing off on a set of heads of terms. The small print is crucial to make sure you are protected and not at a tactical disadvantage down the line. For example, the options offered by a fixed date break clause compared to a rolling break clause. The former may offer limited options when transferring premises as a new landlord may take advantage of your limited timeframe to move. The latter can offer you protection and the flexibility to move within an agreed time frame.
Our team has helped manufacturing companies in particular to negotiate a good deal on new premises. When they are ready to expand into larger premises, they can give notice to move at any point and work to a deadline which suits them.
Some people choose to negotiate terms themselves which is fine as long as there is an understanding that once these are signed off, it is difficult to go back a step and renegotiate.
Right 1st time: Handling disputes
Considering terminating a contract? Stop! Small print in commercial contracts, including standard terms and conditions you may not have digested fully, frequently trips up business owners. If you terminate a contract in breach of its terms, you could find yourself in a time consuming and expensive dispute which could lead to lengthy litigation. Always seek legal advice first. Spending an hour with a lawyer is an investment in your business which could save tens of thousands of pounds of legal costs later on. An even better investment is to seek legal advice about contract terms, including termination provisions, before entering into new contracts. An experienced lawyer can help you negotiate favourable terms, or ensure that your own standard terms apply, ‘future proofing’ your business for years ahead.
If you would like to ask one of our specialists about any of these topics, please email our team.
Catch more hints and tips from the experts, download HM Magazine 5.
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