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Supplement Perspectives

Going Corporate--with Fewer Growing Pains

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Regular contributor Kathleen Dunn asked noted attorney Steven Spitz for his advice on going corporate—and it’s gold.

On the road to going corporate, a small dietary supplement company can face more than a few growing pains, including building a team to support legal and related needs. Of course, if your company is ready to take it to the next level, you’ll want all the good advice you can get to not only make the transition smoothly, but also invest wisely.

Where do you begin? If anyone knows how to build – and run – an efficient legal department to take a company to the next level, it’s Steven Spitz. He’s one of my favorite legal beagles and has served as an in-house General Counsel for industry players, both public and private.

Steven has a talent for shaping corporate teams that tackle legal, compliance and regulatory issues with impressive efficiency … without breaking the bank. In fact, the Daily Journal, a go-to newspaper for practicing California lawyers eager to keep abreast of legal trends, recently profiled Steven and his General Counsel mastery. So who better to ask what a dietary supplement company should do when moving into the corporate zone. I did just that, and the good advice flowed.

Here are a few of Steven’s top recommendations to help a start-up meet their legal and related needs on their road to going corporate:

1. Banish “Founder’s Syndrome.”  “Changing how decisions are made is one of the first steps to smart growth,” says Steven. Small business owners tend to have a specific way of doing things, the so-called Founder’s Syndrome, he explains. For example, decisions made by consensus are common in a small company, but this approach, especially for legal and related matters, is likely to hamstring the company and prevent it from growing effectively.

2. Upgrade to communication 2.0. Recognize that going corporate will require a change in how information is communicated, especially information related to legal, regulatory and compliance matters. But if you’re worried about losing the personal connection of a smaller company as you grow, don’t. The personal connectedness found in smaller companies is based on how you do things, not how big you are, explains Steven. Remember, you define your corporate culture, and you can create one in which employees feel valued, no matter how big you grow. Think of Google, it’s decidedly corporate but has a culture that fosters connectedness and teamwork.

3. Formalize your corporate structure. “Making sure your General Counsel and other senior management have the time to think strategically is critical for growth,” says Steven. Your General Counsel shouldn’t be reviewing label claims, just as your CFO shouldn’t be doing cost accounting, and your COO shouldn’t be double-checking purchasing orders for accuracy. Giving the C-suiters a plate full of day-to-day tasks is just expensive clerk work. Setting up a corporate structure from the top down – before you grow – can help prevent this.

4. Build a department with people who have complementary skills. “When staffing a legal department, hire people who have different areas of expertise that are complementary but don’t overlap,” says Steven. For example, a good mix to support growing needs is one person who is an expert at scientific substantiation, another who is a regulatory guru, yet another (usually a paralegal) who can tackle trademark and licensing issues. And, don’t underestimate the value of a department assistant to support your experts so time, talent and money are well spent.
5. Hire people with more life experience. “Consider hiring people with more life experience rather than entry- or mid-level staff,” says Steven. Why? Experienced people tend to feel more comfortable and confident in their ability to tackle tasks within their scope of expertise but a bit outside their norm. For example, a regulatory newbie may be overwhelmed with import issues, over-labeling requirements, and related tasks as your company enters a new international market, while a more experienced person has the skill base to work through such issues.

6. Stop worrying about the minutia. Owners of small companies tend to worry about all the details of running their company, including legal, regulatory and compliance duties. It’s just the nature of the beast. One bonus of corporate growth, however, is the ability to hire a great team to take care of all the details. Steven says, “With the right hires, the 80/20 rule applies: 80 percent of issues can be handled by competent staff, while only 20 percent rise to the level of the corner office. The result is a senior management team that now has the time to clearly focus on strategically building the business.”

7. Explore innovative staffing structures. Consider offering non-traditional staffing options such as a job-sharing, part-time, or telecommuting. “Legal, regulatory, and compliance needs,” says Steven,” are, for the most part, opinions, reviews, or other written work products. I don’t need to see the whites of someone’s eyes to know that they are working. The proof is in the work product.”

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