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A mid-market company is a company that has an annual turnover of $10 million to $250 million. To reach this size, mid-market companies have generally created a successful product or service and may have expanded to other states. However, if you want to further grow a company of this size, your business needs to have a solid legal foundation and strategies for advancing in an increasingly digital economy. This article focuses on what legal foundations allow for mid-market growth and what strategies you may want to put in place to assist your business growth.

The Legal Foundations of Mid-market Growth

1. Company Structure

An appropriate company structure is important to support growth while minimising the risk to your business if something goes wrong. Generally, most mid-market companies that are aiming to grow will not operate under one proprietary limited company. They will operate under a dual (two), multiple or umbrella company structure. All of these business structures separate the business’s assets from the business operations and operational risk. However, the shareholders still own these holding companies.

In a dual company or umbrella company structure, the holding company owns the:

  • assets including the intellectual property (IP) of the business;
  • invested funds; and
  • operating company (dual company structure) or operating companies (umbrella company structure) of the business. These companies operate the business and have the operational risk including hiring employees, engaging with suppliers and selling to customers.

For example, Hold Co Pty Ltd (the holding company) will own the company trademarks, branding, websites and social media sites. However, Op Co Pty Ltd (the operating company) will enter into leases and other contracts as well as employ staff, hire contractors, and sell to clients or customers.

Some mid-market businesses have multiple operating companies, depending on what structure best minimises their risk.

2. Intellectual Property Protection and Management

It is important for mid-market companies to protect their assets, including IP. For example, your trade marks should be registered with IP Australia. This gives you exclusive use of the trademark for ten years at a time. Once created, your works also have automatic copyright protection. These works may include:

  • writing;
  • code;
  • images;
  • songs; and
  • videos.

Once you have identified and registered your IP, your business should have a process in place for managing IP. Most mid-market businesses have an asset register and someone in control of managing particular IP. For example, if you are an IT company, you may have a register of IT hardware that your company uses. The Chief Technical Officer of the company or IT support manager generally control this type of asset register.

2. Regulatory and Compliance Processes

If your business operates in a regulated industry, you will need to make sure that:

  • you are complying with all regulatory requirements; and
  • your business has a process for overseeing these requirements.

For example, if you are a mid-market tobacco company, you will have multiple regulatory requirements for packaging, importing and advertising. If you planned to grow this company, you would need to ensure that:

  • your packaging complies with statutory requirements;
  • you have a process for ordering and importing products; and
  • you have a process for approving advertisements.

3. Insurance

Another key step to protect your business is ensuring you have appropriate insurance. The type of insurances required depends on your business. For example, a professional services business requires professional indemnity insurance.

4. Employee and Contractor Management

Determining how to manage your employees and contractors is another important step when growing your mid-market business.

First, you need to correctly identify whether the people who work for you are contractors or employees. The Australian Tax Office has a tool to help you determine:

  • whether contractors are indeed contractors; and
  • if so, whether you need to pay superannuation to these contractors.

For employees, you need to identify whether your staff are casual or permanent (full-time or part-time) and ensure you are providing them with the required employee entitlements. It is important to remember that you must pay superannuation to both your casual and permanent staff. In addition, permanent employees also accrue leave. However, if you do not have an HR manager, you may want to consider hiring an outsourced HR team to assist you.

You should have processes, such as policies, that cover:

  • hiring new team members;
  • correctly identifying the type of team member and type of employment;
  • different circumstances that lead to termination, including misconduct and consistent underperformance;
  • creating ongoing team member policies that cover areas such as bullying, harassment and social media;
  • ensuring that the right entitlements are paid; and
  • ensuring that you have all employee paperwork in place.

Strategies to Assist Growth

The following are general commercial strategies that may assist your company to grow.

1. Know Your Customer

Your company’s growth is based on customer or client success. Therefore, it is important to know your customer base, especially if your business plans to launch new products or services as part of your growth strategy. Likewise, if you want to expand your customer base, you need to know the customers that you are targeting. Many mid-market businesses spend a lot of time gauging their customers’ satisfaction and their response to the company’s product.

For example, at LegalVision, we send each of our clients a survey to measure our performance and to determine what our clients want from our service.

2. Adapt to the Digital Age

To keep up with advances in technology and improve your business, you need to consider upgrading your technology. Cheaper and more efficient technology will benefit your customers as well as your business. For example, you could implement:

  • artificial intelligence that monitors social media responses;
  • cloud systems to allow employees to work flexibly; and
  • website chatbots to assist with basic customer queries and complaints.

3. Define Your Values and Purpose

A key part of creating your growth strategy is defining your company’s values, mission and purpose. Strong values can help attract investors, team members and customers. It is important that these values are clear for directors, shareholders, team members and customers.

4. Develop a Company Commitment to Innovation

Another great strategy for growth is adopting an internal company process that encourages innovation. Demonstrating that you are committed to innovation and giving your employees a way to contribute helps you attract quality candidates. It also assists growth by helping you stay ahead of your competitors. However, you can also create a dedicated department for Research and Development (R&D), which may allow you to access the R&D tax incentive as well.

Key Takeaways

If you want to grow your mid-market business, you need to ensure that your company has a solid legal foundation as well as strategies to assist growth. Your business will need to:

  • have a company structure that allows for growth;
  • protect and maintain its IP and other assets;
  • comply with regulatory requirements;
  • have appropriate insurance; and
  • ensure processes are in place for managing contractors and employees.

Your company may also wish to adopt strategies that allow for innovation to stay a step ahead of your competitors. 

If you need help ensuring that your business has a solid legal foundation for growth, you can contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.


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