It is an exciting time when your small business starts to grow. The daily takings increase, customers return and become regulars and the long hours start to feel like they are paying off. But, it can also leave you feeling stressed and overwhelmed. To help manage these feelings, we have addressed five areas to consider for growing a small business.
1. Your Business Structure
How you choose to structure your business is an important consideration at all stages but even more so as you grow. You may be operating as a sole trader, which has suited your business needs up until now. However, as you grow, the needs of your business can change and make a sole trader structure unsuitable. Other types of business structures include:
- Companies; and
When you are restructuring your business, it is important to consider why you are changing the structure and your goals. Do you require a structure that will enable you to expand overseas? Or are you looking for a structure that protects your personal liability and personal assets? Perhaps you’re also looking for a structure that better protects the business’ assets.
Irrespective of which structure you choose, you will need to ensure you have drafted the necessary documents. For example, if you enter into a partnership, you will require a partnership agreement. If you incorporate into a company, you should have a company constitution and, if there are multiple shareholders, a shareholders agreement to govern their rights and responsibilities. If you were to set up a trust, you would need a trust deed.
Any change in business structure may also involve updating regulatory bodies, obtaining new ABNs and/or TFNs and transferring business names and other intellectual property and assets. You should also first speak with your accountant and obtain tax advice as restructuring a business can have significant tax implications.
2. Expanding Your Business’ Physical Location
Due to your growth, you may have outgrown your premises. If you are operating from one store, you might even wish to open another in a different location. Therefore, you may choose to locate another premise to run your business from or even take over more of the space you are currently using.
If you are leasing your premises, then this could involve renegotiating your lease with your existing landlord and possibly, breaking your current lease before the term has expired. You should weigh up the advantages of acquiring a larger premises to grow your business against the possible costs of breaking your lease early or paying more rent.
3. Building an Online Presence
If you have not already established an online presence, it might be the right time to consider developing a website for your business. It’s easy to get caught up in the design aesthetics and functionality on the site. However, ensure you protect your business to the fullest extent possible by drafting the following documents:
- Sales/business terms and conditions; and
Each of those documents is key to managing the relationships with the users of your website as well as protecting the interests of your business and ensuring you limit your liability as much as possible.
4. Taking on Employees/Contractors
The growth of a business can sometimes mean that you can no longer do everything yourself. It makes sense to bring on people to help you. When you hire people to work in your business, it is important to have clear employment agreements and contractors’ contracts that outline the terms and conditions of that person’s service.
There are different types of Agreements, including:
- Permanent Employment Agreement – full-time/part-time;
- Casual Employment Agreement; and
- Contractors Contract.
Whether or not a worker is an employee or a contractor is an important characterisation. If you need help determining whether your worker is an employee or contractor and/or whether an award applies, you should seek legal advice.
5. Update Supplier Agreements
You may wish to renegotiate your agreements with your suppliers or enter into new agreements with other suppliers who can offer better solutions for your business. New supplier agreements are also relevant if you are diversifying your business and looking to start selling different goods or services your business does not already supply.
Growth is a good sign for your business and you can overcome the trickier hurdles through careful planning. Remember –
- Your business structure is an important consideration for all small businesses, and it is especially important when your small business is growing.
- Changing your premises or establishing an online presence can be important as you grow and having the correct documents in place is a key consideration for such a transition.
- Taking on employees can help alleviate the pressure of a growing business, but it is important to have the proper agreements in place to protect the interests of your business as well as those who are working for you.
- Reviewing supplier agreements is important as your needs might change as your business grows.
Need help with your growing your small business? Our team of expert business lawyers are more than happy to help. Get in touch with us on 1300 544 755.