Starting Up: Get It Right Today – Save Time, Money and Stress Tomorrow
You can grab a bucket of water and chamois and become a window cleaner.
You can register a limited company for under £20 in 15 minutes.
You can start a partnership with a shake of the hand.
See, it is easy.
However, if you do not set the foundations correctly, you will probably have some issues further down the line, which could cost you your business. Here are a few things to look at or consider when starting up.
- Are you ready for hard work?
In many cases, people coming from a cosy commercial background, working a 9-5 and being paid the same amount at the end of every month, get a wake up call when they have to work 12+ hours a day, 7 days a week or they do not earn anything for several months. Make sure you have realistic expectations from the start – plan for the worst and every on top is a bonus!
- Make sure you have a partnership agreement
I have been asked to intervene on too many occasions where, after the startup honeymoon period, one person ends up doing more than the other. This is also relevant in cases of illness and maternity, where one person is taken out of the business for a period of time. At the very least, make sure you have a written agreement about who will do what and where responsibilities lie. In many cases this will need to be revised, as the business grows, but you all have to understand where you all stand. A shareholder agreement will also save a lot of stress should one person want to do something major, such as bring another person in, sell the company or simply get out!
- Don’t automatically become a Limited company
In many cases this will be the best solution, as it offers levels of protection that being a sole trader or partner doesn’t, however, there are lots of things to consider before making the decision – personal circumstances, finances, industry you are in etc. Make sure you fully understand the implications of you chosen trading route. Your accountant or a business specialist should be able to help.
- Shareholders do not need to be directors. Directors do not need to be shareholders
Simple, really. But too many startups do not understand this.
Baring these in mind will enable you to act in ways that will prevent headaches, heartaches and business failure – make sure that you do more than read them!