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Starting a business is always a risk, but doing so when in the midst of a global pandemic is particularly challenging. However, with the way we live and work having rapidly changed, many people are embracing the opportunity to start working for themselves.
There are many advantages to doing so, including the freedom to do the kind of work you want to be doing, to choose your own client, set your own hours and more. There are also a lot of challenges you need to be aware of though, and it’s really important that you make the right choices at the outset to avoid potential problems in the future.
As experts in business start-up advice, our team have seen it all. Drawing on our expertise, we’ve pulled together some of the tops things entrepreneurs should think about when starting a new business in these difficult times.
One of the most common mistakes people make is not to start with a clear plan. This isn’t just a formality or ‘nice to have’, it should be an opportunity to define exactly what your business will do, how it will work and why it will be successful. It will also be critical if you need to apply for funding, such as a business loan or grant.
There are many different business plan templates you can use to get started, but key things to cover include:
Going through the process of creating a business plan can be very helpful as it gives you the chance to test out the idea of your business and make a realistic assessment of any particular challenges and opportunities and how you can work around or with them.
This process is particularly important when there are specific challenges you will need to address, such as the coronavirus pandemic, as this will likely significantly affect issues like consumer demand and how your services will be delivered.
Planning for those challenges in advance can help your business succeed, as well as giving confidence that you are a safe bet for anyone you are seeing funding from.
One of the first decisions you will need to make is how to structure your business. There are various options including being a sole trader, entering a partnership or creating a limited company. Each type of business structure has advantages and disadvantages, so this decision should come down to your circumstances and what you want to achieve.
It is a good idea to get professional advice from a solicitor on the various options and which may be most suitable for your business. They can then guide you through the necessary steps to create the right structure, ensuring everything is done in full legal compliance.
It is also important to decide how your business will work on a day-to-day basis e.g. where you will operate from, how you will communicate with clients/customers, what resources you may need.
In the current situation, it is sensible to plan how you will operate during the pandemic and when life starts to get back to some degree of normality, while making sure there is room to adapt to any changes in the rules around social distancing, which businesses can open etc.
You have to accept a certain amount of risk when starting a business, but you should always limit this as much as possible. This is especially true in times of additional uncertainty, like now, when there are additional threats to the success of your business.
There are various ways you can limit your risk, such as setting your business up as a limited company, so you are not personally liable for the business’s debts. Funding the business with a bank loan or other third-party financing rather than your own money can also reduce your personal level of risk if something goes wrong.
You should also take steps to limit your legal risk. Having a solicitor draw up terms and conditions of business can minimise the risk of legal action from clients/customers if something goes wrong. It is also a good idea to get clear advice on any regulations and legislation you need to comply with to reduce the risk of accidental breaches.
A particular concern at the moment is the risk of breaking data protection regulations. With so many people working from home, many businesses have not done enough to ensure they are complying with their legal responsibilities under the Data Protection Act 2018.
Understanding your obligations to protect any private data you hold is critical. Getting it wrong could see you fined as well as the potential for a lot of negative publicity, so it is well worth getting professional advice on exactly how the rules apply to your business and what you need to do to ensure compliance.
With so much uncertainty at the moment, it can make running a business very stressful, so it is a good idea to create certainty wherever you can.
One of the best ways to do this for your business is to have clear contracts and agreements in place with customers and suppliers. This can allow you to more accurately predict your revenue and costs over the coming months, giving you some measure of security over the health of your business.
Commercial contracts and agreements can be very complicated and it is really important to make sure they accurately reflect the needs of your business. While there are templates you can use, they won’t be tailored to your business, so it is always best to have bespoke agreements drawn up by a specialist commercial contracts solicitor where possible.
If you are planning to start a business, the benefit you will get from working with experienced, specialist legal experts cannot be overstated. With many years of experience advising a wide range of businesses at every stage of their journey, our team can provide clear, practical advice in plain English to help get you started the right way.
To find out more about how we can help you, please contact our highly experienced corporate law solicitors in Chichester, Fareham or Havant or use the contact form below and we will get back to you quickly.