Stages of Business - Survival

STAGE 2: Survival

There is a viable business – it’s set up and running.  Customers are placing orders, products and services are being delivered.

At this point, the young business needs to manage revenues and expenses.  It will still be small.  If it has employees, they will typically be supervised by one of the owners or a director.  No employees are making major decisions, but rather following instructions.  This leads to key legal decisions …

When do I take on a new employee, and how?

Taking on an employee is a big step.  It’s tempting to avoid legal expenditure on contracts or employment paperwork but this is shortsighted.  Without proper provisions in place, even the smallest business can face employment claims.  Consideration should be given to handbooks, data protection policies, flexible working (as you might need your employees to work more or less hours) and disciplinary processes.  This last point is important.  While it is great to take on help, a business needs to be able to cut costs if needed… with the lowest risk of a claim.

It’s never too early to sort out employment contracts.

What about succession planning?  What happens if the owner isn’t around? 

A business can continue in a survival stage almost indefinitely, generating enough sales to cover costs and make some profit, but never really growing.  This is fine until the owner sells up.  At that point, a lack of succession planning means it might not be viable.  The owners should also be thinking about delegating authority, and perhaps putting in place shareholder arrangements, with one eye on stepping back from the business – or at least not working every hour that God sends.

If they can achieve this, then the business moves to a phase where it doesn’t need to be solely supported by its owners.  That’s Stage 3 – Success.

To read stage 1 please click here

If you would like further information on the topic discussed in this blog, please contact Derek Hamill by email: dhamill@gilsongray.co.uk or by phone: 0141 530 2022 / 07973 924 333. You can also view Derek’s profile by clicking here.

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.