By Miles Barnes
Solicitor
NORTHAMPTONSHIRE consistently punches above its weight in terms of promoting new businesses. In 2018 it was ranked as the third best placed in the UK for business creation and in 2016 Northampton was found to have the highest average increase in the number of businesses opening locally compared to the other major towns and cities of the UK outside London.
However, operating in a region known for fostering start-ups is not, on its own, enough to start a successful business. There is a whole host of issues that would-be entrepreneurs need to address. But with so much to consider, where should you start? On the legal side, I’d recommend focusing on the following:
1. Legal Structure
Legally a business can take many forms, including sole traders, partnerships and limited companies. There is no one-size fits all answer to what structure a business should have and there are pros and cons to each. The key for business owners is to make an informed decision about which structure they use and why, rather than choosing the path of least resistance and suffering the consequences later on. If you’re unsure which structure is right for you, you should speak to your solicitor and tax advisers for guidance.
2. Terms of Business
‘But nobody ever reads the terms and conditions!’ We’ve all heard it many times and most of us have probably said it at some point. However, whether you’re a stickler for the detail or would rather be out in the marketplace speaking to customers, your terms and conditions of business are critical. They form the first line of defence when problems with customers or suppliers arise and, no matter how strong you think your business is, they will. A good set of terms and conditions is tailored to the business it describes (not ‘cut and paste’ from a competitor’s website!) and is something you should absolutely take legal advice on.
3. Intellectual Property
If you are creating ideas, products or processes, you need to be thinking about how you can protect your intellectual property rights. Can your ideas be patented or trademarked? Similarly, have you made sure you are not infringing someone else’s ideas? The last thing you want as a newly incorporated business is to be hit with an infringement claim from a competitor that derails you before you’ve even had chance to get going.
4. Employees
Are you going to employ anyone in your business? If so, you need to understand what your legal obligations to those employees will be and to put in place suitable documentation setting these out (including employment contracts, staff handbooks and employer’s liability insurance). If you don’t do this, you could be hit with significant fines, penalties and compensation claims not to mention the bad press that inevitably follows such issues.
5. Property
The premises you are looking to trade from could be anything from a spare bedroom, a unit in a start-up business centre, or a unit that has been built and is readily available in the market. Again, taking professional advice will be crucial to ensure you understand your rights and responsibilities. You would not want to become liable for expensive dilapidations and repairs on entering into a lease commitment for a building. It will be essential to take advice from a surveyor and property lawyer who can advise how to minimise the risks.
6. Industry Regulations
Are you aware of and compliant with any specific laws and regulatory restrictions that apply to your industry? For example, if you’re in financial services, have you registered with the Financial Conduct Authority? If you’re selling to consumers, are you compliant with the Consumer Rights Act? Or if you’re engaging with the public sector, are you au fait with public procurement rules? If not, you should take the time to get up to speed and engage with experienced professional advisers to help you do so.
Whilst I appreciate this seems like a laundry list of issues for founders to consider, at a time when they’re focussing on getting customers through the door, but they really are worth thinking about early on and doing so will save you a huge amount of time, money and hassle in the long term.
Miles Barnes is a solicitor in the Corporate & Commercial Team at Howes Percival LLP. If you’re interested in finding out more about any of the above or about what legal support your business needs, contact Miles on 01604 258066 or email
