Success, Growth & Workforce Vitality

We took election week off to pause and listen to the outcome.  One purpose of this blog is to reflect upon thoughtful business development and contribute to wise decision making for thriving organizations and the people whose energy builds them.  One message is loud and clear:  The working class needs better jobs and better conditions.  Private enterprise has the power and opportunity to offer a meaningful response.  So today we move forward in discussing legal means to support good leaders and business practices.

Stage 3:  Success


Setting the Stage for High Growth & Vital Workforce

In the third stage of business you have customers and returning customers, and you have a good sense for your market viability.  Entrepreneurs face the challenges of dividing time and attention between important demands–managing increasing levels of revenue, attending to customers, dealing with the competition, accommodating an expanding workforce, etc.  At this stage it’s common for an executive, often the CFO, to do all of the day-to-day contract negotiations. 

Now that your business is firmly established within the industry, you might be thinking about broadening your horizons with expanded offerings and entry into new geographies.  It will be essential to consider how to develop incentives to attract and retain key employees and new talent.

As your business grows, founders will face a strategic choice, which may be influenced by investors, about whether to exploit the company’s accomplishments and expand or keep the company stable and profitable.  A key issue may be whether to use the company as a platform for growth or as a means of support for the owners as they completely or partially disengage from the company.  Behind the disengagement might be a founder’s desire to start up new enterprise, or simply to pursue hobbies and other outside interests while maintaining the business more or less in the status quo. 

A change in leadership or ownership will have a significant impact on the business so it’s important that the company vision, purpose, constraints and imperatives be clearly defined within the organizational systems, policies and risk management procedures.  The conversations need to held regularly and intentionally or the information may be missed.  It’s also time to get clear on the vulnerabilities and liabilities from the legal perspective.  To get a clear understanding of your assets, we need to understand to what degree they are protected.  Bear in mind, your workforce may be your most valuable asset.

Checklist for Success:

  • Do you have clear agreements with cofounders and partners?  Are they helping you navigate business decisions?
  • How are you addressing change and facing conflict?
  • Do you have meaningful employment policies in place that reflect your company’s vision, values and purpose?
  • Have you adopted a “standard form contract” in favor of your company?
  • Does your contract negotiation process help you learn more about your business collaborator and create clear agreements?  Is your contract useful?
  • Have you maintained good records of your stock purchase agreements and shareholder register?
  • Are you paying attention to taxable events, and in good communication with a tax advisor you trust?
  • Do you have an employee retention policy and plan?

Some businesses have not had consistent legal advice up to this stage.  Some businesses have a standard issue legal framework that did not really involve developing their own set of business values and purposes.  As you begin to zoom out from the tedium of starting your business, it’s critical to create space to zoom out and tailor your legal strategy and framework to your unique business personality.  All of these things affect the climate and communication of your business.  You can actively develop culture of your business or it will develop on its own, unconsciously. 

You’ll also need to be sure your risk mitigation plans and books and records in order.  Businesses that are intentional in developing and implementing company and employee policies will be prepared for successful growth and expansion in the next stage.


A word about founder exits:

One reason businesses fail is legal disputes between founders.  In my experience, partners often cross ways with respect to how much time commitment is expected of the cofounder, who owns what percentage, who owes what investment of cash or other assets, whether key decisions require unanimous vote, how a sale of the business will be decided, priorities and values.  The list goes on.  It’s essential to have a clear written agreement between founders regardless of how close the friendship is when you enter the business.  Litigation can tank a just-viable business.  It distracts the business owners, is costly, and alienates employees and customers.  In your foundational documents there should be operative provisions that delegate how founders voluntarily leave the business, and how disputes are resolved.

Next week our discussion will continue with the expansion stage of business.  Please do reach out if this post raises any questions or personal experiences.  We’d love to learn more about what's going on for you.