All business owners should consider having strategies in place to deal with how they plan to grow their business and how they will exit as a business owner. By having these strategies, your business will have certainty in how it responds to certain situations and ensures that your business is acting in its own best interests.
What is a Business Growth Strategy?
A business growth strategy is a plan which articulates the methods in which your business will engage in to grow business. It can also be used as a basis for debt and/or raising capital for the business. By instilling a strategy in your business’ approach to growth, you minimise the risk of your growth affecting your cash flow.
At GLG Legal, we can assist you in determining what strategies are the most appropriate for your business and its growth. Our lawyers can also assist you in implementing these strategies into your business by drafting the legal documents.
What is a Business Exit Strategy?
As the name suggests, a business exit strategy is a plan that sets out how you as the business owner will exit the business. There are multiple methods in which you can exit your business, some voluntary and others involuntary.
There are five main methods in which business owners may exit their business, these are:
- Selling the business to another individual or corporation
- Transferring your shares in the business to another individual or corporation
- Partnership dissolution
- Involuntary liquidation
Generally, most business owners elect to exit their businesses in accordance with methods 1 to 3 above as these options ensure that the business is kept alive and running. Methods 4 and 5 are often utilised when the business no longer has the capacity to run or when you wish to close down your business.
No matter what method you choose or if you are unsure on which method is best for your business, please contact our commercial team at GLG Legal who will be happy to assist you in creating and effecting these strategies.
What legal obligations are there in selling a business?
As the owner of the business, you owe obligations to various parties affected by your conduct, including your employees and the potential buyer/s. Such legal obligations and considerations may include:
- What will happen to your intellectual property rights in patents and/or trademarks
- Have you notified the appropriate people and organisations that you have sold your business (ATO, ASIC, etc.)
- Whether you need to cancel any permits or licences with the council
- If you need to transfer any property agreements such as leases on equipment or property
- What creditors need to be informed of your sale
Depending on your business structure as well, there will be further requirements that you will need to consider and ensure that are met prior to the sale of your business.
We have dealt with numerous business sales at GLG Legal and are well versed in advising our clients on what legal obligations they need to be thinking about when planning to exit their business.
Considerations for the business owner
We understand the importance of keeping a business successful when a hand-over occurs. Not only is it important to staff who have been loyal to your business, but it is also important for your clients who have an expectation of what your business can deliver. Therefore, in addition to the legal obligations that you must meet when exiting your business, we encourage business exit strategies to involve plans to ease the transition for the staff and clients, this may include:
- Preparing senior staff through training to ensure that the skills remain consistent during the transition
- Creating and passing down strong relationships with clients to your staff who will be able to ensure that the client remains a client of the business
- Reviewing internal policies and procedures to ensure that they are all up-to-date and align with the exit strategy
By having these considerations in mind and acting upon them, you will greatly help your business and its staff and clients transition when the new business owner takes over.
GLG Legal has advised numerous clients in their business growth and exit strategies. We have seen the benefits that come with planning these strategies well in advance for the business. Whether you’re thinking about growing your business or exiting your business, or even if you’re starting up a new business and want to be well-prepared, please contact one of our expert lawyers today.