Free advice for start up businesses
Starting and growing your own business is exciting and daunting. Too many small business fail after disputes arise between business partners, or with clients, which could have been avoided by better planning in the early days.
Our ten top tips are designed to help business owners avoid disputes and grow to their full potential:
1. Sole trader, partnership or limited company?
Setting up your business in the right way from the start can be key. There will be tax implications, it could affect the availability of finance and credit available to your business and it could affect your relationships with customers and employees. Talking through the different options with an expert at the very start, can help you make the right decision.
As your business grows, you might want to consider changing its legal status - maybe it would be better to register it as a limited company, or maybe you and your partners should consider changing to a limited liability partnership. Again, discussing the different options as your business grows, can make all the difference.
If you are buying an existing business, specialist advice is vital to ensure that all of the assets of the business you are buying are properly transferred to you.
2. Terms and Conditions
Too many businesses operate without properly drawn up terms and conditions in place. On other occasions, even though terms and conditions have been drawn up, they are not properly incorporated into contracts with clients and customers. Sometimes terms are included which are unenforceable, which could render the whole contract null and void.
Using template terms you find on the internet can help up to a point, but they will not have been designed for your specific business. Many will contain US legal terminology which is not applicable in the UK.
For small businesses which supply goods or equipment to clients, a retention of title clause is a must - if the customer doesn't pay, you can take the goods back, but only if you have provided for it in your contract.
As your business grows, keeping your terms and conditions under review is vital. When was the last time you checked yours?
3. Your Business Online
Very few businesses operate without a website. Do you own and control your own domain name and website and can you control what is put on it? If customers have a way of reviewing your business, do you regularly check these reviews, and respond? Have you optimised your website for use on mobile devices and tablets, and does your website perform well on Google?
Have you taken steps to protect your intellectual property and confidential information online? If you are collecting data from clients, are you storing it in the right way, so that you comply with relevant legislation?
Increasingly, rivalry between businesses can lead to fake reviews being posted, which can be incredibly damaging. Talking to an expert about how to deal with these issues at the outset can avoid problems later on.
4. Accountancy Advice
Taking good quality accountancy advice at the appropriate stages in your business' development, is as important as good quality legal advice. Professionals should be able to recommend who to turn to for advice from other practitioners.
If at any stage you have been poorly advised by a professional, you will need legal help.
5. Financial Control and Debt Recovery
Once your business is up and running, maintaining your cash flow is critical. Robust terms and conditions, strict payment terms and retention of title clauses will help.
If you are spending time chasing debt you have less time to actually run your business. Using our very low fixed fee debt recovery service has helped many small businesses. We will send a 7 day demand letter to your debtor for just £50 plus VAT and it is up to you whether you spend any more money with us chasing the debt, although in our experience, most debtors will pay upon receipt of a solicitors' letter.
6. Employment Contracts
As your business grows, you may need to take on employees. Keeping up to date with developments in employment law can been extremely time consuming for small businesses, as it changes so frequently. Properly drafted contracts of employment, together with regular checks to ensure that the contracts remain compliant with the law, are essential for avoiding employment disputes.
7. Owning a Property
Whilst your business grows, you might need to borrow against a property you already own. Or perhaps your spouse has a business and wants to secure a loan against your home.
In all of these scenarios, you or your partner/spouse will need good quality legal advice at the appropriate time.
8. Plan for the Future
Always keep one eye on the future. What are the main risks and potential opportunities to your business, caused by the economy, changes in the law or recent cases? Do you have a business partner who wants to retire? Do you want to sell your business?
If you are expanding, you will need advice about your employees - different numbers of employees create different obligations for employers.
9. Exit Agreements
People fall out with each other, it's a fact of life. They also may simply want a change, or want to retire. You need to make sure that your business partners and you have a way out, if you want to go your separate ways. Directors' contracts and shareholder agreements can mean that when you want to get out, there is a process to follow which has already been agreed.
Acrimonious disputes between partners are costly and time consuming to resolve and having pre-agreed what to do is like having an insurance policy.
10. Legal Expenses Insurance
Finally, in business, sometimes it's impossible to avoid a dispute. This could be about your property, a dispute with employees, a claim against a client who is refusing to pay or a dispute with business partners. If you don't have legal expenses insurance, these disputes can be incredibly costly to rectify.
Samuels Solicitors, based in Devon, have 25 years of experience in advising business clients. For a free discussion about your business, call 01271 343457 today or contact us by email.