RICHMOND, Va. — A business broker friend of Jim Wilson’s has a saying: “All businesses that don’t fold will eventually be sold.” It’s a useful frame, Wilson says, because it suggests that exit planning isn’t a separate phase of business ownership — it’s woven into the whole thing from the beginning.

That was one of the messages of a recent National Federation of Independent Business (NFIB) webinar titled “Buying, Selling, or Expanding Your Business,” presented by Jim Wilson, an attorney with Wilson Law Group, PLC, who has spent more than 30 years working on startups, acquisitions and business transactions. 

In Part 1 of this series, we looked at the foundational decisions that shape a business, including entity structure, intellectual property, the “think like a franchisor” mindset and the retirement advantages of separating operating and real estate companies. In Part 2, we examined the steps necessary when buying an existing operation, where Wilson believes the biggest mistakes tend to come from what buyers don’t look for. Today, we’ll conclude by exploring expansion, employee management and selling considerations.

Opening a Second Location

When clients ask about expansion, Wilson’s advice is specific and a bit counterintuitive: Open the second location far enough away that you can’t just run over and back multiple times a day.

“Open a location that’s far enough away where you, as the founder, can’t easily get there, take care of a problem, and get back in one day,” Wilson says. “You want it to be something that is standalone as much as possible and is self-sufficient.”

The distance is a feature. A second location that’s too close invites the owner to stay involved in everything. Requiring a deliberate trip forces the real question: Do your systems, your manuals and your people actually work without you there? Assign a trusted manager, Wilson says, and hand them the operational guides from the parent business and monitor performance through regular reports. For a dry cleaner with documented processes, it’s a genuine test of whether those processes hold up somewhere else.

When People Problems Become Legal Problems

Growth adds employees, and employees add risk if relationships aren’t structured and documented carefully.

The contractor-versus-employee question gets more scrutiny from state and federal governments every year, Wilson says. The classification isn’t a minor paperwork matter: Get it wrong and the exposure can be significant.

“Do not think that you can take people who are employees and save yourself money in some way by making them independent contractors unless you make a substantial change in how they work, how they’re treated and what they’re doing,” Wilson says. “The state governments and the federal government are very interested in making sure employees are employees.”

On terminations, his formula is simple: Document what the employee is supposed to do, document where they’re falling short, coach them toward what’s expected and then act if it doesn’t change.

“If they’re not doing it,” he says, “then tell them, ‘Look, this isn’t working. We’re going to let you go.’”

Even in at-will employment states, a termination without documentation can generate unemployment insurance costs and other complications. The paper trail doesn’t change the outcome, but it can protect the business from making a costly situation worse. Non-compete agreements, Wilson says, vary widely by state in their enforceability and are shifting in many jurisdictions. His advice? Talk to local counsel before relying on one.

Choosing a Business Broker

Many prospective buyers will go through a business broker. While this can work, Wilson points out that brokerage is a loosely regulated field. In many states, there’s no licensing requirement to operate as a business broker. He’s seen the full range of what that produces, including one memorable case involving a pastor who brokered deals between members of his own congregation.

“He would sell the guy in the first pew’s business, help the guy in the third pew buy it, and find somebody on the other side of the church to be the tenant,” Wilson says. “I didn’t enjoy doing the deal I did with him.”

His advice is to find someone with a real track record and get a reference from someone who has actually sold a business with that person. A broker who doesn’t understand liens, financing structures or deal mechanics makes the transaction harder for everyone involved. 

As for business valuation, Wilson recommends starting with your banker or a trusted broker who can give you a realistic range,  using industry norms as a baseline and the actual history of your business to refine it.

The Consistent Thread

In closing, Wilson believes that legal and business planning aren’t separate categories. Entity decisions affect what you can sell and for how much. Documentation affects what a buyer will pay. Early planning is almost always cheaper than cleaning up problems later.

His parting advice: “If it matters in the business, put it in writing.”

For Part 1 of this series, click HERE. For Part 2, click HERE.