April 2015

Closely-Held Business Life Cycle

Why do some closely-held companies keep getting better and more profitable while others seem to grow weaker over time? Strong leadership and maintaining a great team to deliver on the company's mission are keys. We believe that establishing and maintaining the right corporate structure also plays an important role. Working with closely-held business owners over time, we see certain trends.

In the initial or start-up phase, the most successful business owners take steps to avoid disasters and assure that setbacks are not fatal for their business.

During the growth phase, these successful owners add value by identifying the resources that are leading to their success, including their employees and intellectual property, and adding legal protections to strengthen and protect these advantages.

Finally, in our experience, it is often after 15 years or more in business that owners acknowledge having built a successful business and begin to devote focused time to anticipating future challenges and devising strategies to deal with these.

Following is an attempt to summarize these phases, with some examples, in a hierarchical format. To view this diagram in its entirety click here.avoiding