From the ‘cradle to the grave’ - The lifecycle of a business

Every business has a natural lifecycle and recognising which phase you are in – and when you are likely to need legal advice – is key to success.


Rather like human development, a business is born, it grows and expands to meet new challenges, it matures and, with luck, enjoys success, before entering the “retirement” exit phase while, much like proud parents, its owners encourage independence under a new watchful eye. Taking the time to identify where you are in your company’s lifecycle and which stages carry their own legal requirements will help you make the right decisions.

1. The seeds

You have an idea for a great new business, and you’ve researched the market. You now have to establish a business plan, decide on the ownership structure, and find professional advisers. Legal advice at this stage could cover agreeing the operating relationship of the partners in your business to include, vitally, a partnership or shareholder’s agreement as well as key person contracts trademarking your name and protecting any key IP, and looking at commercial premises to buy or lease.

2. Start-up

The start-up phase is probably the trickiest and your small team will probably be balancing many responsibilities as you try to bring your ideas to life. You need to work out a plan that will allow for growth and a lawyer will advise you on investment funding, contracts of employment, and your terms of business.

2. Growth

Your business is solidifying its stance in its target market. More sophisticated structures have been put in place, revenue is increasing, and your business has greater turnover. This is when you want to minimise the effect of potential disrupters such as problems with suppliers, manufacturers and key staff. Getting legal advice to ensure your contracts are properly drafted may prevent damage to both your finances and reputation.

3. Maturity

You are feeling secure. Your annual growth is steady, cash flow is strong, operations are smooth, and things are fairly predictable. Look out for signs that you need to start making changes and don’t miss the chance to pursue opportunities - you might consider expanding or tapping into a new market, which is when you should seek legal advice on additional funding and commercial lease negotiations where you may have outgrown your premises. As owners you may have an eye to your exit and will

want to seek expert advice on your tax and estate planning and how best to structure the business for the next generation.

4. Renewal or decline

Even the most successful business come to an end and it is key to exit in a planned and structured way. Many prefer to sell to a third party or to the up and coming management team. Disputes can arise where there is a difference of opinion over strategy or, frankly, each other. If you find yourself in a position where you are being pushed out, or you want to remove an underperforming director, its essential that early legal advice from a disputes specialist is taken,

Looking honestly at which phase your business is in and seeking legal advice at the right time will help you guard against potential issues, plan for long-term growth and success, and lead, should you wish, to selling on a thriving business.

For legal advice at any stage of your business lifecycle, please contact Ramona Derbyshire -

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