The beginning of a new year typically sees an influx of business births, as people use this new opportunity to follow their ambitions and realise their dream of starting their own business.
Starting a new business is obviously a complex process, especially for limited companies, and a number of considerations should be made to make sure that you’re starting off on the right foot.
Here are 10 top tips for new businesses, which could also be relevant for some existing businesses, detailing important considerations that many firms may have overlooked.
- Get a financial adviser
Advisers are a must for all businesses as they can raise awareness of issues or requirement that may otherwise have been overlooked. Our research found that under half of businesses (49%) have a financial adviser, meaning that many businesses may not be making the most of their finances.
- Recognise the importance of your Articles of Association
For a limited company your Articles of Association are a vital document to your business and it’s crucial that they are fit for purpose and consider having an up-to-date shareholder agreement.
- Review your will
Make sure that your shares are mentioned in your will. If they aren’t, it could cause issues for both your family and the business if your share of the business should go to probate. This could leave your business without a decision maker for a significant amount of time in the event of your death.
- Hire and retain the right people for your business
People are the heartbeat of any business and it’s crucial that you spend time hiring the right staff to help you grow.
- Prepare for auto-enrolment
Auto-enrolment is fast approaching – it’s crucial that you’re prepared for this and seek advice on what considerations should be made.
- Consider the importance of key people to your business
Ask yourself, what impact would it have on my business if I or a fellow key person should die or become ill? Our research found that 40% of businesses would cease trading if this were to happen, so it’s important to consider protecting the business against this risk.
- Review your business loans
Assess any loans you hold or are planning to take out. Speak to your adviser about how you can protect yourself from missing repayments or having to repay this at short notice if anything was to happen to you or a key employee. A business’s first year tends to have its ups and downs and it’s crucial that you’re prepared for any shortfalls to limit the impact they may have on the longevity of the business.
- Benefit from a Relevant Life Plan
A Relevant Life Plan is similar to a traditional life insurance product but can be taxed as a business expense, offering a more cost-efficient product to cover your family. This is a product which could be worth speaking with an adviser about, to determine if it’s a suitable option for you.
- Make sure you have suitable disaster recovery plans in place
Be prepared for the unexpected. The recent bad weather has demonstrated the need for disaster recovery plans, but they shouldn’t be limited to floods, fire and theft. Businesses should include plans for the death of an owner or key person to limit the impact this could potentially have on the business.
- Enjoy it!
Make the most of all opportunities presented to you and enjoy the process of building your own business!
Richard Kateley, Head of Specialist Protection at Legal & General