The top 10 considerations for start-ups
The logistics of starting a business from scratch can appear near impossible to navigate. The legal hurdles alone are enough to stress even the most determined entrepreneur, however Bennett and Philp's Business Advisory Expert Nadia Sabaini says with a little skilled help, getting your business off the ground needn’t be daunting.
Here is Ms Sabaini's top ten tips you should take to ensure your business launch is one which lasts:
Make a business plan
It might seem obvious but you should never start a business without first making a business plan. As well as your overall proposal and objectives, ensure you include your research conducted on the competition, your projected profit and loss, cashflow analysis and a thorough marketing plan. You’ll need a detailed business plan to apply for finance or pitch to investors. If you are in Queensland, browse the Queensland Government - Business Queensland website which contains a template business plan and other tools.
Choose your advisors
Consulting experienced lawyers and accountants is invaluable to the success of your business. When choosing your advisors, it’s good to ask for recommendations by family or friends, but this shouldn’t be your only consideration. Do your due diligence and choose people that fit your requirements and have the requisite experience in your industry or the field of expertise you require.
Select a business structure
Establishing whether your business runs as a sole trader, partnership, company or trust is one of the earliest and most important decisions to make, as there can be transfer duty and other adverse consequences to changing a structure once it’s in place. Make sure you consult with your lawyer on this decision and choose a structure that will fulfil both the current and future needs of your business.
Sign a shareholders’ agreement
Often overlooked, this is a crucial step to minimise disputes that may arise in the running of your enterprise. Even companies with only two shareholders should still have a shareholders’ agreement prepared. It forces the partners to discuss and agree on how they will address the most likely eventualities that may arise, such as illness or a desire to resign, and provide an agreed process for buy-outs and transition arrangements.
Register your intellectual property
Protecting assets such as your business name, logo and any novel business idea from misuse by external companies is imperative. This can be done with formal IP registration via trademarks and patents, or in some cases with confidentiality agreements. It goes without saying that you should also check if anyone already owns or is operating under your proposed business name or logo.
Ensure your licences and policies are in place
Obtaining the necessary licences and permits, as well as implementing privacy and workplace health and safety policies, will prevent costly litigation down the line. It is important to check what your legal obligations are as they often depend on the business you are conducting. See your lawyer to put in place all the necessary licenses, permits and policies before you commence trading.
Choose how to finance your business
Traditional bank loans, venture capital, outside investments and sales of shares can be confusing without appropriate legal advice. Keep in mind that the sale of shares in companies requires certain procedures to be followed, so be sure to seek legal advice before making offers of shares including to family and friends. If you are considering crowdfunding, note that crowdfunding equity is now regulated, and certain procedures need to be followed.
Sign employee agreements
Even if your employees are under a Modern Award, it is important to have employment agreements in place to detail all remaining conditions, including matters of confidentiality and policy. Be careful falling into the old trap of engaging an employee as an independent contractor to avoid employee obligations. The law will class an independent contractor as an employee in many circumstances.
Prepare good terms and conditions
Legal drafting ensures terms and conditions which are legally effective. Although it can be expensive, it is one of the greatest investments you can make for your business. Don’t fall into the trap of buying terms and conditions online. They are often designed for other jurisdictions and are unlikely to meet the requirements of your particular business, so they won’t be any help when you need them most.
Take out insurance cover
Insurances such as workers compensation insurance, public liability and contents insurance for your premises are vital and often required by law or by your lease, but you should also consider other insurance policies that may be useful to your business, such as cyber insurance for data breaches. A lawyer can review a policy to confirm if it addresses any specific items of cover that are of concern to you.
Nadia is a Director of Bennett & Philp Lawyers and a member of our Business Advisory team.
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