10 Tips for Successful Business Start-up
Neil J. Butler, Solicitor, Thurles
Does everyone involved understand the Agreement?
If you are the only person involved in the Project , then skip this.
BUT if you want a successful business start-up with one or more colleagues, then everyone must agree and accept the terms of the Project.
Some very important questions need to be asked and answered to arrive at clear Terms.
Have a look here at my suggestions for those questions.
Those terms should be written into a document – let’s call it a Subscribers Agreement, where the Subscribers are you and your colleagues who want to go into business together.
In Company Law it is also referred to as a Shareholders Agreement.
Any group of people who are serious about having a Successful Business Start-up, must start with this.
Should we form a Company for our new Business Start-up?
Subscribers often start a business without consulting a Solicitor and, as a result, often incur higher taxes and become subject to significant liabilities that could have been avoided if the business was started as a limited liability company.
The Companies Registration Office in Dublin (the CRO) oversees the formation and ongoing filing of records by Irish Companies. The Office of the Director of Corporate Enforcement has a separate role to play – enforcing compliance with the Companies Acts.
The new Companies Act 2014 is likely to be commenced in June 2015 – it brings very significant changes to the duties, obligations and liabilities of Company Officers and Promoters/ Subscribers. It is essential that anyone setting up a Company or indeed currently involved in one, have a clear understanding of those changes. We at Neil J. Butler & Co. can help you with this, so get in touch !
A Company is formed by filing Statutory documents with the CRO. The costs for forming and operating a Company are often greater than for partnerships and sole traders due to legal, tax, and accounting issues.
However, a Company generally offers significant advantages for Subscribers (and subsequent investors) including, significant liability protection from business creditors, tax savings through deductions and corporate reliefs and depending on the sector, greater ease in raising capital.It can also allow an easier means of handing on the business to the next generation.
Of course Sole Traders and Partnerships can later convert to a Company but costs in doing so can be significant.
For more on Sole Traders, see my Note here.
For more on Partnerships , see my Note here.
There are, however, significant tax implications when an owner might want to draw some wealth out of the Company, if the Company has traded successfully for a time.
In the same way as good ongoing legal advice is essential to any business, so too is quality tax and accounting advice.
T & C’s – beloved of Lawyers but essential for Successful Business Start-up
Whether in retail, manufacturing or Services, every business that provides something to a customer for payment should have a standard set of Terms and Conditions , otherwise called a Contract. It si no different for a business start-up.
“Standard” may be misleading – it should be the terms that your business works to, for each item of business it transacts. Those terms will not be the same for another type of business or even for the same type of business carried on by a competitor. But they are standard for you.
You can help yourself here– get sample contracts of what other people do in your industry. Use it as a place to start and then consider what specific things you want to cover.
Examples are :-
- clearly spelled out pricing,
- when payment is due,
- what penalties or interest is owed if payment isn’t made.
- limit or minimize any representations and warranties about the product or service
- include limitations on your liability if the product or service doesn’t meet expectations.
- Include a “force majeure” clause relieving you from breach if unforeseen events occur
- state how disputes will be resolved – arbitration and/or mediation
- state the location of the Courts that are to have jurisdiction over any disputes- presumably those in Ireland
Make sure you have an experienced Business Law Solicitor to review and finalise it – it must comply with Irish and European Law.
We at Neil J. Butler & Co. Solicitors can help…..
Answer the hard questions NOW
What happens when one of the Subscribers/ partners wants to exit from the Business Start-up?
What do they get, and under what terms?
What happens if a Subscriber/ partner dies? If their ownership interest goes to a spouse, does the spouse have a say in management decisions?
I know these questions can be awkward but it’s much easier to address these up front than it is when you’re ( hopefully) making lots of money or worse, trying to find a way to survive. Get it on paper in the beginning.
[The essential Questions to be asked are in my Note here]
Sort the Backoffice – organise your records
Business breeds paper and records. It’s expensive to manage and to store. Decide to keep as much as possible in digital format. Use Web services like Google Apps.
Every Business Start-up needs to put effort into this aspect – once done it becomes much easier.
Get all the important documents in one place early –
- Terms and Conditions; premises lease;
- Tax files and templates for Reports;
- Policies for Internet use by employees , email use, use of Company phones; claiming expenses; sick leave ;
- disciplinary codes and procedures ;
- employment contracts,
- Finance and Loan Offer letters,
- Safety Statements, Risk Assessments etc.
Taking the time to get your paperwork in order now, at the start, will help your efficiencies as you grow, will make it easier to integrate new staff, make you more attractive to Lenders and possible buyers and will also help defend you from legal attack, should it happen. It is key to having a Successful Business Start-up!
It’d be pretty awful if, after a few years of really hard work, just when your business was doing really well, you get sued by someone who claims you are using a form of their name or product name.
You might be forced to change the name of your key product or even the entire business – and to pay compensation!
Investigate , research , claim your own copyright in a logo/ brand; apply for your own trademark, if applicable. Give your Business Start-up every chance to succeed !
Get Legal Advice early !
7. Get a Proper e-mail address
A detail like your new business operating under a free email address from Hotmail, Yahoo, Sky etc. can damage the credibility of that business HUGELY. It is not businesslike!
Interestingly, Google’s Gmail is considered acceptable these days, given the huge investment they have made to encourage business use through it’s Apps for Business; Google Adwords, Communities and Google +.
If you have a website (you do, don’t you?), it’s easy to set up an email address with that domain, and doing so will bring a much needed level of credibility to your business.
Otherwise it is easy and inexpensive to register ownership of your own web name or Domain name.
Use a quality email signature.
List your name, title and contact information in your email signature.
Your company logo, if used properly, can be okay too.
Try a picture of your actual signature, to personalise it.
Don’t be tempted to use HUGE fonts / multiple colours/ silly pics/ emoticons – not professional!
A good website.
Anyone you’re hoping to do business with is going to look for your website, and what they see is a reflection of you and your business.This is especially true when you are promoting a Business Start-up.
With services like WordPress and thousands of quality templates available at low or no cost, there really is no reason why you should not have a good web presence.
10. Have you thought about Intellectual Property Rights?
There is an expanding area of Law dealing with the protection of original ideas, thoughts creations and expression.
Even as you and your colleagues and friends are chatting about your new idea for a business, you are refining it and developing it. But who owns the idea? Who owns the design of the product that comes from the idea? Who owns the brand name you choose; the logo you adopt or design?
How do you get protection for that idea, that design, that product?
How do you ensure that your Business Start-up has ownership and control?
Once you form a business entity, that Company or Partnership doesn’t own that IP unless you get it into the entity. You get it in by licensing it or by completing an Assignment agreement. Anyone with whom you collaborated,or who contributed to the idea, design etc. needs to get assigned into this entity, to ensure there is no doubt later nor any obstacle to future sales and profits.
Again, expert legal advice will pay for itself in the protection that can be arranged.