9 Essential Tips For Small Businesses
There are a million different things to consider when you’re setting up your own business. Some are less important and some are entirely critical. Here is a quick list of things you should keep in mind when you’re just getting started.
1. Start as you mean to go on.
It’s very important to set up your business as a separate entity from the start in order to protect yourself and your personal assets. It is extremely important to determine the proper entity structure as this will affect how you borrow money, how you are taxed and how you structure the sale in the event that you sell your business. If you neglect to do this, you will be personally responsible for all obligations and debts that your business may incur.
New businesses can have a very low cash flow to start off with and as such many lenders will ask the owner to personally guarantee any loans. The potential impact of this request must not be underestimated as a failed business can have grave financial consequences on the owners.
2. Keep Records
It is required by law that you keep full and proper records of all company actions and transactions. This includes payroll, taxes, company decisions, licensing and permits, health and safety requirements and maintenance of company bookkeeping. There must also be a clear definition between your company and business finances.
3. Insist on written contracts and agreements.
Having well written and considered contracts and agreements can limit and avoid future disputes leading to much smoother running of the business. You must consider all eventualities from the voting rights of new shareholders to sales processes in the event of selling the company. Give these items due consideration in the early stages of the business so that you don’t have to worry about them later on.
4. Insist on NDAs
Finding and setting up new partnerships can mean the difference between a thriving business and a failed one but it is of utmost importance to protect your company’s processes, know-how and systems whilst doing so. With this in mind, it’s essential to get a signed NDA from any prospective partner before disclosing any sensitive information.
5. Use Employment and Independent Contractor Agreements
Be very specific in these agreements in order to avoid any misunderstandings or confusion. It is critical to have the right employees and to ensure their happiness. A comprehensive employment contract is the first step on this road. These contracts and agreements will also stop your employees from using your companies resources to start their own company in competition to your own.
6.Ensure that your intellectual property is protected
Any inventions, processes, discoveries or work that has resulted from your companies creativity must be protected. You should properly register, copywrite, trademark and patent wherever applicable. Do it early to safeguard against future developments.
7. Create an employee handbook.
A handbook is essential for managing employment matters. It clarifies exactly what is expected of employees and explains expectations and procedures. This clarification can help to avoid expensive litigation in the future.
8. Plan ahead to avoid litigation.
Litigation is generally an expensive last resort and as such as much should be done as possible to avoid it. In many cases, it can be avoided by diligence and fully understanding your commitments before signing any contract. Diligent documentation of company matters also often helps in avoiding litigation.
9. Get good legal representation.
Ensure that you have built a legally strong foundation for your business right from the start by seeking legal advice early on. Bad decisions or a lack of understanding can often lead to problems in a company’s future. It’s far easier and far cheaper for a lawyer to build the legal framework correctly from the beginning than it is to retrospectively adjust it and correct problems.
An experienced lawyer can help a start-up business to avoid legal issues from the start, nipping any issues in the bud before they become destructive. You should ensure that you always seek legal advice before you make any decision of consequence to your business.