23 June 2016
Build a business that’s Made to Last
The legal landscape is constantly evolving. Long gone are the days when just a solid grounding in the latest legislative changes would suffice. To provide meaningful advice, lawyers need to know a company inside out, they need to be sensitive to its commerciality, they need to work alongside its owners to build a substantial business that will be around for a long time, and identify and facilitate ways and means by which to achieve it.
For most owners they want to see their microbusiness grow into a healthy, strong company that could be passed on to the next generation to manage. To achieve this, there are many factors to consider: the people involved, identifying what you really want out of the business, listening to clients and customers, protecting your product and securing supply.
Richard Branson once said: "Train people well enough so they can leave. Treat them well enough so they don’t want to."
It is important to retain key people in your business as they will contribute to its success and take it forward when the owner wants to take a step back – or out. By incorporating financial incentives, such as employee share schemes into the plan, you can encourage key managers to stay and grow the business, with the promise of a share in its success.
Alongside retaining key staff, it is important to develop the next leader and senior team so that the owner’s departure doesn’t have a negative effect on the company and the business will continue to do well.
Owners’ visions of the future of their business
It seems pretty obvious but it’s worth considering the relationship you have with the co-founders of your business and ascertaining what each of you want out of the arrangement. Would you like to grow it to a certain size before selling it or are you all invested in it for the long term? It encourages business owners to face any difference of opinion from the beginning rather than further down the line when a lot more money is at stake.
Listen to clients
Always listen to clients and customers to determine exactly what they need; then link it to what is profitable for the business.
IP protection is a must
Disclosing business plans, pitching new ideas and proposing new designs are well-trodden routes for businesses to encourage a new client to buy and an investor to invest, but they come with a constant risk of IP (intellectual property) infringement.
Protecting IP, by excluding others from using your creations, can offer a huge commercial advantage. However, it can be expensive, and if third parties breach protected IP, the difficulties of proving that breach and the costs of bringing a rival to court can put smaller firms off pursuing a case. But there are cost effective methods that can be employed to ward competitors off your turf: ensure all contractors have contracts confirming transfer of ownership to the business, confirm IP ownership in employee’s contracts and ask clients and investors to sign Non-Disclosure Agreements.
Your supply chain is one of the most collaborative relationships in your company, and it can pose greater risks to the confidentiality and availability of corporate information. Tracking the flow of information and keeping an eye on key access points in order to continuously manage information security risks, is an essential part of building a stronger business.
But over everything touched upon here, it’s about planning ahead at all times. Successful businesses always do rather than just rolling with the punches. And according to Roger Harrop, former Group Chief Executive of a FTSE quoted company, on a personal level it’s also about business owners having ‘belief, passion and courage’ in what they’re trying to achieve – the acronyms of which reflect the B P Collins name – a serendipitous coincidence!