The Rise of the Start-Up
2020 was a difficult year, but many positives also came out of it – less commuting, less pollution, more banana bread. There were also nearly half a million new businesses created in the UK during 2020 which, according to Companies House, is the highest number on record.
Necessity is known to drive innovation, and whether it was the unfortunate loss of the need for some industries and services, or the need for new products or hobbies to pass the time, 2020 provided many people with the opportunity to start the business they have always dreamed of. Let’s not forget that some of the biggest companies were set up during difficult times: Disney, Microsoft and AirBnB, to name just a few!
So, as we look towards a return to some sort of normality, and you start to grow your new business, now is the time to make sure that your business is “legally ready”.
Co-founders: are you on the same page?
It is easy, when starting a business, to assume that it will all be plain-sailing with your business partners, but you need only look to some bigger companies (such as Facebook or Apple) to know that this is not always the case; you should therefore agree at an early stage how your business relationship will work.
To do that, and to save any little disagreements turning into bigger problems, we would suggest putting a Shareholders’ Agreement in place, to outline and govern the relationship between the founders/shareholders and the company. Some key considerations when creating your Shareholders’ Agreement would be:
- What are the goals of the business?
- What are the key roles and responsibilities of the founders/shareholders?
- How will decisions be made, and by whom?
- What happens on the departure of (or if you need to remove) a founder or another shareholder?
Have you got good contracts?
Many businesses should look to have in place ‘standard-form’ contracts with their customers or clients. Having a standard contract ready to go eases the customer experience and can deal with many of the potential legal problems that could arise. The main points to consider will depend on the product or service that you provide, but from a general perspective you will need to think about the following:
- What are you providing to your customers i.e. do you need to describe the relevant goods or services?
- How will the order/purchase process work? This is particularly important if you are selling goods/products.
- What, when and how will you be paid?
- Will you need to deal with cancellations, refunds and/or returns?
- Can you or your customer end the contract (and, if so, how)?
- How will you deal with any complaints or queries from customers?
You should also consider putting in place contracts with any suppliers, distributors or other third parties that you work with. Having these in a ‘standard-form’ as well will help to streamline your business and processes, so that all parties are on the same page and know where they stand.
These are just a few tips to get you going. Next week we will be looking at how to protect your intellectual property and ensure you comply with data protection laws.
In the meantime, if you want to discuss your new business or get some advice on any of the issues covered above, please contact Olivia French.