30th July 2014
Congratulations – you have decided to start your own business!
According to Start Up Britain, 502,068 new business were created in 2014 alone: the largest number in recent years, and so it is fair to say that, with this number, only a proportion will have previous experience of starting or running a business. This means there are probably upwards of a ¼ million business novices out there that were not here 18 months ago…
This is great news from an economic perspective as it indicates growth in the economy, in theory, but for me it begged just one question: how many of those businesses were set up in the right format, with the correct paperwork and behind-the-scenes agreements in place? Sorry… Occupational hazard!
I suspect the answer is very few and the reason I can say that is my own personal experience in speaking to and working with businesses that didn’t seek proper advice at the time of establishment or incorporation – and they’re regretting their hasty approach.
The main reason for not doing things properly is often cost. The initial phases of setting up a company can be costly: buying stock; securing premises; hiring staff, etc. There is so much to do – and pay for – is an additional £500 or £1,000 to pay an accountant or other professional to take you through the set up process a good use of money…?
The answer to this question is undoubtedly YES!
Setting up a company is not simply about registering with Companies House and HMRC. The legal structure of the company has many repercussions that are not always immediately obvious. If there is more than one of you with an equity share in the business, do you have a shareholders agreement, for instance? Or something that clearly sets out how you will handle long-term sickness, death, sales of shares, inability to work or disputes? Have you created a business plan or at least worked out outline projections for the first year?
So aside from the compulsory filing documentation, which one must not undervalue or dismiss, there is often a lot more to setting up a business than simply picking a name and a website address.
Is the purpose of this blog post to encourage more people to come to me when they want to set up a business? Yes, I suppose it is. But actually, having worked with companies that have not set themselves up properly at the start and others that have had disputes which have all but ruined the company, I am passionate about doing it right.
So whether it’s us or another firm, I would always advocate the use of professional advisors if you have not done it before yourself. Please give one of us a call.
My top tip: Why not use it as your first training session in negotiation? Buy the advice but haggle a fair price!