Tips for starting a new business
Starting a small business can be an overwhelming process and there are many challenging areas. Here are some of the areas to keep in mind:
Status of the business
A decision that needs to be made early on in the process of setting up a business is how it will operate. Confirming the right set up from the outset can be vital for the business’s success, and so a decision usually needs to be made whether the business will have sole trader status or set up as a limited company or limited liability partnership.
There are, of course, benefits and drawbacks to each of these, but for those without the expertise of what each offers, it can be a daunting prospect so it is important to get the right assistance at the outset.
Another important factor will be where the business will operate from and who will own the premises. The people involved in the business will need to make sure they have the proper agreements drawn up and obtain advice on their rights. If they enter into a lease with too high rental payments and without the facility for a break clause, this can mean additional financial hardship for the business.
Another challenge that any new business will face will centre around employees. Chances are, most people who are launching a new business for the first time will never have dealt directly with employing staff, so having the right framework in place is crucial. This includes having the correct policies, contracts of employments and data protection policies. New businesses may be tempted to download contracts of employment from the internet, but these documents may not always be tailored to individual business needs and may not contain details of recent employment law changes. Ensure you have properly drafted employment contracts in place that do not cause problems later on and seek advice on their implementation.
Larger organisations often have the benefit of an HR department but smaller businesses may not be able afford full time HR personnel. It is therefore important to invest in training for managers so that they keep up to date with employment law changes.
Another important area for a new business is which insurance policies should be taken out and at what level. Consider the types of policies for the business, such as for example health insurance; public liability insurance; employer’s liability insurance; professional indemnity insurance and any others.
Perhaps one of the most challenging aspects of any new business will be raising the finances to start the business. Finances are often very limited when a new business is started. Whether it’s family and friends helping out in the initial stages, a business loan through a bank or pitching to investors, a solicitor can help start-ups in various ways. This is not only by working out what the best strategy for their own funding is but solicitors can also help with for example, how to go about putting together business plans, pitches and documentation that helps to secure the money needed to grow and expand.
Of course, it’s not all just about how businesses get the funds to operate; managing the finances is just as important, which is why you need the right bank account that caters for your business needs. Business accounts can vary greatly, so it is important to research and obtain advice on what pitfalls to look out for.
Intellectual property and licensing
It is easy to forget to protect the great idea you had in the first place when starting your business. Having post termination restrictions in your contracts of employment and comprehensive intellectual property agreements is a priority for any entrepreneur.
An issue many might not consider before they go into business is the legality of their enterprise, and especially when it comes to matters such as licensing and certification.
For example, even a business selling food needs to obtain the correct licence to do so, and not obtaining the correct documentation and permission before launching the business can lead to problems such as fines, or even worse, the business being closed down.
There are likely to be many legal issues which might arise in the next few years as a result of Brexit.
A business will have to consider how the consequences of departing from the EU might affect any business plan, including standard supply terms and conditions, and whether any legal agreements need to be updated given potential changes to labour rules and tariffs on goods.
Engage the right advisers
Having the right professionals who understand your commercial needs is essential for any business. They can keep you up to date with changes in the law and also having a person/individual who has a commercial approach can help provide practical as well as professional advice.
This is not legal advice; it is intended to provide information of general interest about current legal issues.