Legal Services & Business Life Cycles: Part 2 – Growth
In this series, we’re exploring the legal needs of different business life cycles, including what kind of legal professional is best-suited for each. In this second piece, we’re going to discuss the growth business lifecycle.
Knowing when you’ve hit the growth business-cycle, AKA, scale
One fine day, you’ll realize that it’s been a while since you anxiously dry-heaved before running payroll. When it comes to knowing what converts leads into sales, the guess work is gone. Your revenue increases steadily and consistently quarter over quarter, and churn is trending down. You look around your office and instead of seeing your colleagues running around with their hair on fire, you see focused employees who are ready and willing to tackle new challenges every day. Everyone seems to understand their place in the company, and where the business is going.
Congratulations, you’ve entered the growth business life cycle. This means that your legal requirements have now evolved from one-time projects to recurring needs. You’ll likely find that you require more contract negotiation, employee management, and possibly M&A. Risk management comes up in board meetings, as does the creation of policies and workflows that help the engine of the company run smoothly.
As the CEO, this is an exciting phase where you get to exit the weeds to become the true visionary of the company, guiding strategic growth instead of having your hands in all of the day-to-day tactics. In this chapter of your business, you’ll need a legal business advisor, but you probably still don’t need a full time general counsel. This is where an outsourced GC can be the perfect fit.
The good news is that once your business has reached this stage, you now have recurring revenue that can help pay for these new business opportunities and operating expenses.
Your business should also now have a human resources department, a sales department, a CFO, and maybe even a layer or two of management, all of which can benefit from legal counsel.
In this phase, an outsourced GC can help you avoid growing pains, while mitigating risk and becoming part of your continued growth engine.
Here are some of the most common ways an outsourced GC helps a growth-stage company.
Business growth is incredibly exciting. You know what’s not exciting? All of the contract work that comes along with it. An outsourced GC can help take over contract management, freeing up your time to focus on important strategy and expansion plans for your company. A great outsourced GC – like the ones you’ll find with Auxana – take it even further, utilizing both technology and their expertise to help draft, review, negotiate and administer the contract administration process. This can include everything from customer contracts to marketing agreements, to NDAs and data-sharing licenses. This means that whether you need contract assistance for a potential new business partner, customer, vendor or contractor, you’re covered. Your outsourced GC can also review and update applicable existing contracts to both business and legal best practices, ensuring that agreements made during your startup phase are on the up-and-up.
Legitimate contract management will also play an important role if and when your business finds itself in the midst of a contract dispute. Contract disputes makeup about 60% of the 20 million civil cases filed every year, and can cost a business $54,000 or more for a liability suit. Should you find yourself in this situation, having the right documentation in place with the help of your outsourced GC can save your company both time and money in the long run.
Protecting your intellectual property
Success leads to imitation and competition, and sometimes that competition occurs via dishonorable or even nefarious means. As such, you’ll need to be militant about protecting the lifeblood of your organization. Seems stressful, right? Again, with the right outsourced GC, the IP of your company will remain secured through the administration and management of proper NDAs, copyrights, licensing, patents, non-compete agreements, terms & conditions, and privacy statements.
Something else you may have not considered? Your business may find itself inadvertently infringing upon another company’s IP. If this ever becomes the case, your outsourced GC can help safeguard your business in this scenario as well.
Ownership & equity agreements
Another key result of success? More and more people are going to want “in.” You’ll likely find yourself overseeing a larger cap table of shareholders, as well as opening up your business to evolving ownership structures. While you’re putting in the effort to establish strong, credible relationships, let your outsourced GC manage the equity & option analysis, negotiation of terms with partners, and securities offerings. Auxana’s outsourced GCs will even have technology in place to help you manage and collaborate on your new agreements and offerings.
Risk is inherent to growth, so legal counsel is a must
Most businesses don’t make it past the startup phase, so getting yours to this point is an achievement in itself. At this phase of your company’s growth and your career, you don’t want to add any undue stress or tasks to your day, and certainly don’t want to open up your company to risk by letting legal matters slip through the cracks. Bringing in a trusted legal advisor can be an important next-step in your organization’s continued growth.
Auxana’s outsourced GC’s can offer your business real-time legal advice, an institutional knowledge of your company culture, product, vision and team, as well as automated systems and workflow – all while operating through a flat-fee monthly rate that won’t break your budget, and allows you to plan your legal spend accordingly. The proper outsourced general counsel will help mitigate and manage your business’ risk, while remaining a transparent and flexible partner to your continued growth and success.