In Show 150 – Phase 7 – Training originally broadcast on Facebook Live on Wednesday 14 November 2018 we explore this interesting topic.
Everyone know the dictionary definition of the word expansion. But what does it really mean in a business context. There are many different ways of doing it. You could open a second physical location. Or you can enter into a franchise to allow others to use your intellectual property.
The reason it’s in Phase 7 of the Business Legal Lifecycle is because it comes after you’ve consolidated your business. If you have any problems in your business at all they are going to become multiplied when you expand. Your systems, processes and procedures have to be in place properly.
One aspect of expansion that you have to consider is about other markets. What other markets are available for your product or service? Is there a product that other business owners would want to use? There are consultants that you can talk to that will help you better understand your market. Understanding your market is especially important when it comes to your systems and processes. If those are not clearly and easily understood then no-one will want to use them.
Whether this is the first time or the fifth time you’ve expanded there are certain things that you have to do. If you’re opening a second location your team has to be talking to each other.
It’s so important to make sure that your lease and insurance are in place for any expansion. Same goes for creating a franchise. You have to have airtight agreements that will guarantee your success in the future. Getting any one of those agreements wrong can sink the business.
Remember when you’re creating a franchise that you have to get it right. Thinking you can just license your IP without the expense of franchise can be a bad mistake. There are strict rules around licencing and franchises. Running afoul of those rule can result in big fines.
Another way to expand your business is by merging or acquiring another business. Mergers and acquisitions are terms that are used interchangeably but they are actually quite different. A merger occurs when two companies decide to combine their businesses into a new entity. An acquisition, on the other hand, takes place when one company buys another outright.
When you’re buying a business you are going to have an opportunity to investigate that company. If you don’t know what you’re buying you’re guaranteed to fail. There is no one definition for due diligence it’s a very broad term and deliberately so. You have to talk to your lawyer to make sure that your due diligence is correct. Also, you have to ensure that the due diligence part of the sale contract is up to snuff. Looking at the history of the business, the staff and potential liability issues are all critical parts of getting this right.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.