Changes to Make When a Business Is Quickly Growing

Changes to Make When a Business Is Quickly Growing

calculator with Business paper, business lawBusiness owners who have businesses that are quickly growing may need to make some adjustments when their companies approach the $1 million mark in annual revenues. The more successes that a business has in the market, the larger the hurdles it might also simultaneously encounter. Understanding how to modify a business’s plan and approach can be vital in ensuring its continued success. A business law attorney might provide guidance to small business owners when their businesses are transforming into companies with larger market successes and presence.

Hiring New Talent

When businesses first start, the business owners often wear multiple hats while maintaining a small staff. As the businesses grow, their needs for additional staff are likely to become apparent. Businesses that are nearing the $1 million mark may need to consider adding human resources staff, accounting staff, and others. They may require additional departments and the people who have the expertise to run them well. The hiring process for companies that are growing will also become more formalized, and changes might need to be made to streamline the process. In order to find key personnel, business owners may need to branch out beyond their personal networks, recruiting people using strategic efforts. Finally, adding staff who may help to make strategic decisions for the company may be important so that the business can avoid missteps as it grows even larger.

Changes to the Business’s Structure

Many small businesses start out as limited liability companies. Businesses that are nearing the $1 million in annual revenue mark may want to attract investors, and investors generally want to see a greater degree of separation between the business and its owner than an LLC provides. Business owners might want to consider forming a corporation. If the structure will be changed, the business owner may need to establish a board of directors and follow all of the reporting and meeting requirements. A business law attorney may guide clients through the process of incorporating in order to help them attain greater protection for both their businesses and themselves. In addition to the structure, the business owner may also need to alter how the business operates so that it doesn’t do so in a manner that slows the business down.

Leveraging Debt For Success

Business debt for growing businesses differs from the type of debt that individuals might personally hold as well as from the type of debt that small businesses carry. While small business owners and individuals may view debt as something that must be quickly erased, growing businesses may leverage their debt in order to grow more or to take advantage of additional opportunities. As businesses grow to the $1 million mark and beyond, they may also find that they have many new available sources of financing. Business owners will want to consider whether they want to attract additional investors or if they instead want to engage in debt financing. A business law attorney may help clients to consider the available options and choose the options that are best for their businesses.

How billing is handled might also change. While many small business owners engage in net-30 billing, when they grow larger, doing so is similar to offering free financing to their customers. In some cases, this might mean carrying thousands of dollars while waiting for their customers to pay. Changing to a different billing option might be appropriate so the businesses avoid basically floating debts for their customers.

Changing Approaches

Small business owners often try to keep everything under their control, but this may not be feasible when their companies grow large. Fast growing businesses that reach and exceed the annual $1 million in revenues mark may become too large for the business’s owner to control every function and task. Business owners may need to adjust how they think so that they approach their businesses more like chief executive officers rather than small business owners. This will involve trusting others to make some of the important decisions while overseeing how the company is running in general. At some point in time, small business owners who have businesses that have grown very fast will need to be willing to step back, allowing others to assume some roles and then to trust their decisions.

While many small business owners likely do not think that reaching $1 million in annual sales will be potentially problematic, fast growth may require additional planning. Businesses may hit obstacles that are unexpected, and if they have not planned carefully, they may falter. A business law attorney may work with the owners of rapidly growing small businesses in order to help them plan for problems and to avoid them. Business owners whose companies are growing quickly can avoid many financial and legal pitfalls by making the necessary adjustments to account for their business’s growth, size and increased needs.

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