As we covered in sections one, two, and three of this five-part series, ambitious contractors looking to expand their business must always be mindful of the potential pitfalls of scaling out their business too quickly. Along with battling many of the unpredictable elements on the construction site, contractors must also battle their own checkbooks, manage their workforce, and always consider ways they can increase their productivity and maintain a successful business.
In this section, our Chattanooga construction lawyers will focus on how contractors can avoid many of the growing pains of expanding their business by fostering relationships with their employees and scaling out their business the right way.
Many business owners only see the good in growing their business. It’s important that they understand that bigger isn’t always better. There are a lot of potential risks when growing a business. For example, how will key employees of a company you are acquiring react when they realize they are being “bought out?” Will they jump ship during the transitional period or stick it out? Introducing new management or a new business process inherently raises red flags for workers. They can easily feel alienated during the process.
Value the Opinion of Everyone Affected
It’s important for contractors to remember that acquiring a business is only the first step of their expansion efforts. It takes a collective effort of dedicated professionals to increase the value of that investment. If you are considering acquiring a company or want to expand your existing company, it’s best to allow all of your key employees (and the key employees of the company you are purchasing) to weigh in on their thoughts of expansion. You can avoid any backlash if you communicate with your key employees before you make any critical business decisions that may impact their careers.
Greed is Never Good
Unfortunately, many business owners elect to expand because they are either motivated by the almighty dollar or their own ego. Although we all want to enjoy success and live comfortably, there is a right way and a wrong way to expand your construction business. If you are interested in learning more about the appropriate steps to take when expanding, please read the final part of our series.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.