Chris Carmen / July 11, 2017
The following blog was originally published on American Express’ Open Forum by Nicole Cober, Esq., Small Business and Legal Analyst, NewsChannel 8. @. *Original content has been edited and modified for length.
As you think about business expansion, several key characteristics should be in place. First, your management team and operational systems should be clearly defined and be functioning smoothly. Second, profits should have increased and flourished, with more than just enough revenue to cover expenses. Finally, the products and services should be tested and effective, with your brand gaining credibility and recognition.
Once you’re confident that expanding your business is a sound option, there are five key legal and business issues to consider before expanding to a second location.
1. How will the new location be managed?
Training and management succession are key. You can’t split your time between the two locations without training and support. Putting all your energy and resources into a new location could come at a cost for the existing location.
2. What type of legal relationship will the entities have?
Whether your existing entity is an LLC, C corp or S corp, you should consult with an attorney and accountant to determine what the new entity’s relationship will be and why.
3. How much capital do you need?
Sit down with a financial advisor and accountant to do a comprehensive analysis of the financial investment required for the expansion. Lending institutions and investors are more likely to be readily available to assist your efforts once you have a proven track record of profitability.
4. Do you have a seasoned real estate broker or attorney who understands all the leasing issues?
A fatal flaw in my expansion effort was that I negotiated my own lease, and I didn’t specialize in real estate. The bottom line was that I didn’t understand all the expenses, so when I opened, I was paying double what I had anticipated. Utilizing a strong and unbiased real estate broker with knowledge of this market is an invaluable asset.
5. Have you trademarked your brand?
If your research confirms that expansion is right for you, you should then consult with an intellectual property attorney to ensure all your brands, taglines, patents, and copyrights are in place. These are your business’s important assets and can add value to your bottom line. They need to be protected from the strength of your business.
A proper accounting and assessment of all those factors can take your business to new heights.
Are you prepared to expand your business? Ready to take a look at office space and lease considerations? Carmen is ready to get your search started.
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