An Inside Look At the Life of a Business

An Inside Look At the Life of a Business

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Every business goes through a life cycle, namely the idea, start-up, building the team and return on investment.

Business Life Cycle

1. The idea

The business idea or concept in this context involves the product or service you intend to market and sell.  This should be combined with the values of the business owner, as this is the only way in which to instil an organisational structure ultimately associated with the brand of the business when it has expanded or grown.  This will always constitute the reason for wanting and aspiring to having a return on investment (phase 4).

2. Start–up

In order to start the business, access to funds are required. This can be done either by way of accessing your own excess funds, lending from family, friends or from a financial institution or alternatively finding an investor. In either instance the business owner must believe in his/her idea or concept and instil this confidence in the lender or investor and eventually in the consumer.

The business must therefore also honour its agreements. It is therefore important that a business plan and the relevant legal documents and agreements are put in place when concluding the financial arrangements. In addition cash flow and marketing strategies must be implemented to facilitate business growth.

3. Building the team

This entails not only hiring employees but also engaging with suppliers and stakeholders (including shareholders in the company structure). Not only should these needs and positions be filled strategically and with proper purpose, but the necessary legal provisions also be put in place.

For example, implementing employment contracts, grievance (employee complaints) and disciplinary procedures in addition to policies regulating facility use (telephone, internet and other supplies). This is essential in setting trends of acceptable and unacceptable employee behaviour and also instilling the values and culture of ownership (phase 1).

 

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As for suppliers, the appropriate service level and confidentiality agreements (to protect valuable information suppliers such as IT specialists are exposed to). Finally, stakeholders such as BB-BEE transactions and shareholders agreements.

It is important that shareholder agreements regulate the relationship between the shareholders and the memorandum of incorporation between the owners, shareholders, the company and third parties. This in addition to governance policies for continuity in the broad sense. Executing the correct format of agreement and ensuring that it is professionally drafted is of the utmost importance.

4. Return on investment

Having instilled value in the brand by ensuring that the values of the business owner have been instilled throughout the organisation and forging a successful venture is key in achieving return on investment. At this point, continuity measures must be appropriately implemented and business, as well as ownership, protected.

Continuity, in order to increase the value of the venture and avoid it being under – valued or terminated on the death or retirement of the owner or other key role players. Thus structuring the business owner’s personal affairs with as much care as structuring the business affairs is vital.

This to safeguard the business from claims from personal creditors. Thus, implementing professionally drafted antenuptial contracts, indemnity and risk aversion strategies, as well as insurance and estate planning strategies are of the utmost importance in addition to seeing to the needs of the business.

Further measures to protect the brand, its integrity, tax and wealth sustainability in the broad sense are of the utmost importance. This involve the engagement of key role players such as informed attorneys, accountants and tax consultants.

Starting a Business? This How NOT To Do It.

Nicolene Schoeman-Louw
Nicolene Schoeman – Louw is an admitted attorney of the High Court of South Africa, as well as being a Conveyancer, Notary Public and Mediator. She is the Managing Director of Schoemanlaw Inc Attorneys, Conveyancers and Notaries Public (Schoemanlaw Inc Attorneys) in Cape Town. Visit www.schoemanlaw.co.za for more information or email enquiries@schoemanlaw.co.za