Expanding Company, Expanding Issues

​People keep asking for your product...Distributors are romancing you, telling you that there is a ready market for your beer in some far off territory. You begin to think that, wow maybe I can be a regional or even a national player. What does that mean from a capital standpoint? Do I have the stomach to increase the bank loan by THAT much? How many people to I need to hire? How does that change the company culture?

 

Salespeople

You can’t be everywhere all the time.  That means that you have to start tracking where the product is and how it is doing.  You also have to add a sales force.  That means that suddenly you may have employees in a different state.  How do you understand what they are doing and how your accounts are doing?  I have never seen a manufacturer self-distribute outside of their state. That brings out a whole host of issues. Now you are no longer touching your end-customer. How does that affect the brand? You are starting to enter new markets and are now subject to new taxes.  Multistate taxation is a tricky prospect because each state and taxing entity has different ways of doing things.  Some transactions that are tax-free in one place are taxable in another. 

HR

If you open a taproom (tasting room west of the Mississippi), your number of employees are bound to climb. With more employees comes more complexity.  Once you start flirting with 50 employees, your company will be faced with complying with a whole host of new laws and regulations.  There are some simple things that you can and should be doing to setup a good HR infrastructure. We’ve setup HR departments and know what is needed at what time. 

Do I need an Audit?

Expansion financing typically leads an owner to ask me this question. As the company increases debt on the books, the bank will typically want to have some assurance that the financial statements will stand up to an auditor's inspection.  Don't panic. You will see the need for an audit two or three years before an public accountant knocks on your door.  That being said, there are things that need to be looked at and addressed as you grow from you preparing the financials to a compilation to a review and finally to an audit.

Logistics

You probably have inventory in several buildings.  What is the best way to ship product?  What is the best way to allocate scarce product?  Organizing a company to handle the complexity of a multiple location business is very important.  If your inventory gets out balance, the whole system is untrustworthy.

MRP – (material resource planning)

As the company grows, forecasting what you need and when you need it becomes a bigger and bigger issue.  What if there was a system that could tell you exactly when you need to order everything?  Such a system exists.  Larger software systems have a module called an MRP module.  Using your own company’s data, it can forecast everything including the need for purchase orders and how to package your product. 

Long range planning

All things change.  Sometimes the end of the story is as important as the beginning.  What is the long term goal of the company?  What about succession planning?  Is it the best idea to create an ESOP?  Sell to private equity?  

Ready to see how we can help? Review our list of Expanding Company Services.

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