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4 Legal Issues Every New Business Needs to Know

19th February, 2015 No Comments

I’ve worked with thousands of start-up businesses through a range of start-up support services, including Ready for Business and Virgin StartUp, and one of the most common hurdles they all face is understanding legal issues.  We can help with business plans, loan applications and general advice, but when it comes to legislation, it’s worth talking to an expert who can advise exactly what applies to you and your business.

Starting a business can be exciting and rewarding, but its important that you get it right.  Challenges can range from getting the right premises to ensuring you have watertight contracts to protect you from suppliers, customers and even your fellow businesses partners.  So it’s important that you get some initial advice – this can help prevent unnecessarily bad decisions being made, which will ultimately cost you more in the long-run.  We discussed the issue with Brendan Donohue, Partner at Bristol and Portishead based Burroughs Day, Quality Solicitors, who regularly advises start-ups and small to medium sized businesses, and knows the common pitfalls that many new businesses fall into.  Here’s our top 4 legal issues that you need to be aware of:

Having the right Terms and Conditions of Business:-

Terms and Conditions of Business are an essential document which every new business should put in place immediately.

You want to ensure you have a binding, legally enforceable contract with your suppliers and customers.  It can protect you against non-payment; help limit your liability to your customers; and set out a clear and legally compliant policy for delivery, returns and defective items.  It will also help you avoid disputes arising at a later date.

One size does not necessarily fit all.  Every business has different and changing needs and will require specifically tailored provisions.  Some things to be aware:

The laws for contracting with consumers and businesses are different and your terms will need to be tailored accordingly.

If you are contracting over the internet, there are additional laws to comply with.

Standard terms and conditions do not usually include a “retention of title” clause. This enables you to retain ownership of the goods you supply until you receive payment. When properly drafted these are extremely useful in the event of a buyer failing to pay or running into financial difficulty.

If you ‘crib’ from other people’s terms and conditions, you can’t be sure that they are legally compliant, enforceable or drafted in the best interests of your business.

Only careful drafting can ensure your terms form part of the contract with your customer and take precedence over any additional terms introduced by them.

It’s therefore worth investing in some legal help at the outset. A solicitor can help you consider all of the issues you may face and resolve what should happen in each scenario.

Shareholder and LLP Agreements:-

Shareholder and LLP Agreements are confidential private agreements between the shareholders of a company or members of a Limited Liability Partnership (LLP).  All companies/LLP’s need an Agreement as it sets out in an agreed framework for matters that are not covered in the constitution i.e. management and decision-making, dispute resolution, exit strategies and remuneration.  It also protects the other shareholders or members if someone dies or becomes critically ill.  The Agreement doesn’t need to be filed at Companies House.

It is advisable to enter into an agreement at the outset.  It can be very expensive and time-consuming to resolve issues that arise at a later date without pre-agreed terms.

There is rarely a standard document. Every business has different and changing needs and the appropriate agreement will require specifically tailored provisions.  From the simple to the very complicated, they need to be tailored to the specific business’s needs.

Your staff:-

A business is really only ever as good as the people it employs.  Having a comprehensive recruitment process and the right employment documentation is a major step towards protecting your business and your staff. Here’s why:

A properly drafted application form and thorough recruitment process are crucial for selecting the best people to work for your business.  Training and then performance managing unsuitable recruits can be time consuming and costly; so can finding their replacement. You also have a duty not to discriminate against job applicants.  If you do you will more than likely find yourself at the Employment Tribunal.

Make sure your staff contracts are tailored to your business and contain all of the necessary and legally required information – there are financial penalties if you don’t!  Ensuring staff are clear about what is expected of them will reduce the risk of disputes and help you to defend any potential Employment Tribunal claims.  An ‘off the shelf’ contract or policy won’t necessarily be suitable for your industry, or cover specific things unique to your business.

The right contracts can help prevent your employees from stealing your business idea or valuable clients.  Where appropriate, you can also prevent someone from leaving to work for a competitor.

As a minimum, you also need to have grievance and disciplinary policies in place.  They will set out your obligations as an employer to make sure you deal with staff complaints in the appropriate manner, and help you to follow a fair procedure if you need to dismiss someone.  Getting it wrong could result in you not only facing an Employment Tribunal claim, but also further financial penalties if you fail to follow a legally compliant procedure.

There are additional policies that you should invest in to make sure you (and your staff) comply with your legal obligations.

Registering your logo as a trade mark:-

Intellectual property is something you or your business creates that’s different to anything else available on the market. It includes copyright, patents and trademarks and can be the product that you invent or your businesses logo.  ‘IP rights’ (as they are commonly called) can become an extremely valuable asset for a business – something that’s not always thought about when a business is just starting out.

Registering your trademark gives you immediate protection from the unauthorised use of it by someone else.  If your trademark is not registered it is much more difficult to take action against someone using it without your permission. It also promotes brand awareness and reduces the chance of confusing your trademark with another trader. The ® mark also provides your business with a recognisable symbol of quality.

Can I register my logo as a trademark?

The Intellectual Property Office describes a trademark as ‘a sign which can distinguish your goods and services from those of your competitors.  It can be for example words, logos or a combination of both’.  The only way to register your trademark is to apply to the Intellectual Property Office.  If your trademark meets the necessary criteria you can register it.

Most people starting out in business focus their time on getting the orders in and making sure they get paid, which is totally understandable. However, taking a little time to think about your IP rights, and how they can protect the business in the long run, is well worth considering at the outset.

Written by Tara Gillam, Business West



John Mitchell, Chief Executive, Enterprise First

…. and another one bites the dust!

9th February, 2015 No Comments

Yes … a ‘Queen’ lyric, and they were great to watch, weren’t they?

I was reminded of this when reading the fans forum at my hometown football club – Scunthorpe United.  They are a team with a lot to look forward to:  new Chairman, new Manager, new players, and a superb new stadium to be built next year.  They do have a big problem though, and that is increasing their fan/customer base.

What is becoming increasingly clear is that if they have lost a fan in the past, it is very difficult to get that custom back.  Perhaps someone has had a bad stadium experience; maybe it was poor entertainment (surely not!); perhaps it’s rising ticket prices; or is it that alternative entertainment is now more compelling?  Whatever the reason, even if you have been a loyal customer for many years, if you don’t feel looked after and valued, you will go elsewhere and may never return.

This is such a common problem with all businesses.  We know about the large corporates with little investment in customer service, the hours spent on phone lines trying to resolve a simple problem.  As it becomes easier to switch from that bank, or utilities supplier, to another, we are all voting with our feet.

For a small business, losing long standing customers can have serious consequences.  So, what do businesses do that puts this at risk?

*  Putting all the time and effort into developing new services for new customers whilst not offering the same to existing ones

*  The ‘A’ team (being the new business sales team) with probably little resources for looking after existing users

*  Investing heavily in marketing promotion, case studies, etc, focused on enticing new customers

*  Basic lack of regular communication and engagement

But steps can be taken to avoid it …….

We all put a huge amount of effort into, and prepare carefully, for any meeting with a potential new client.  A review meeting with an existing client is sometimes seen as a chore and often with little preparation.  So step back from all the activity around chasing new customers and think about your existing ones.

What can I do to improve their experience and build their loyalty?

Can I give them something over and above what I am contracted to do?

Monitor their account and take the first step if there is a need to improve.  Make them feel they are very important to you.  They should be able to rely on your support to help them resolve any new challenges they face.

The Cavendish Consortium can help you think more clearly about this.  With Growth Vouchers you can receive up to 50% / £2,000 to invest in strategic advice.  Or you can simply contact your local member organisation and ask to discuss customer care with a business adviser.

Finally, we should all know that it will be easier to sell a new services or ‘add-ons’ to our existing customers, than to a new customer.  It will also make our existing customer feel valued.

Customer care really does make commercial sense ……. don’t let another one bite the dust.

Written by John Mitchell, Chief Executive, Enterprise First




Just get out of the door!

4th February, 2015 No Comments

I was at a networking event recently when I met a lady who had just started her own personal training business.  On quizzing her a little about how she began the company she told me that she had been very overweight and just needed to make a change in her life and so she got fit, which led to her new career.  Having hung up my football boots last year and been rather lax in my exercise regime of late I asked her what the one piece of advice she could give me and her simple and answer was, “Just get out of the door!”

I was reminded of this conversation when I was speaking to another business owner who was telling me about her fear of social media.  I recounted this story using the tale as a metaphor to encourage this client to face their fear and ‘just get out of the door!’

However, the true power of this very simple sentence only really hit home when the business owner sent a tweet thanking me for the session and used the words as a hashtag at the end of her tweet.

I have been working with businesses for almost ten years now and there are three pieces of advice that have always stayed with me, the one relayed above, and these two others:

‘Remember you make the weather’ – taken from the wonderful Mr Vic Goddard, Headteacher at Passmores Academy.  Its meaning is straightforward: your mood will dictate the mood of those around you.  So, for example, if you come across as being stressed and tetchy it gives your staff permission to behave in exactly the same way.

‘Surround yourself with radiators, not drains’.  Its meaning is similar to that above: the most effective teams are those with enthusiasm at its core.  When you have a negative individual in the team it can make everything feel like an effort, and can really affect morale.

So its up to you to make sure everyone is pulling in the same direction with a positive outlook.

Sometimes the best advice can be so simple.

Written by Tom Bircham, Nwes Senior Business Events Advisor

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