• December 2, 2023

Things to Consider for Vertical Integration

Manufacturing a single product might have been the start of your business, but what if you start manufacturing hundreds of products? As your company grows, you may consider integrating your business vertically in order to maintain better control over your needs. Developing subsidiary companies underneath a parent company may allow your business more opportunities for growth and development while keeping costs low in-house.

Changing Your Insurance

Often, insurance is a significant expense for any business. Looking into the captive insurance industry could allow you greater say into your risks and liabilities, and keep the investment within the company. This might also allow you to create better tax rates due to distributions and premiums. This sort of self-insurance could help your bottom line.

 

Stop Paying Others to Manufacture Your Goods

Instead of working with an exterior company to manufacture your product, as your company grows it could be beneficial to build your own factories. This allows you to exercise better control over the product lines, materials, and have intimate knowledge of building properties and labor. Creating a subsidiary company for manufacturing your product further may allow depreciation deductions.

Taking Over Your Distribution Network

Relying on outside transportation companies may leave you at the mercy of your competitor’s needs. Investing in a fleet could facilitate allowing you to maximize your company’s efficiency by controlling your time and assets in shipping according to your own schedule. Owning and managing your own freight distribution might also allow better business to business relationships as you can take responsibility for delays in shipment instead of blaming another company.

Growing corporations have new and more complicated needs than a single-product business you may have started with. It is beneficial to be thinking about the future and how you can better protect your business and balance your assets and liabilities.