When entrepreneurs are at the early stages of starting a fledgling company there are a multitude of important factors to consider such as funding, staffing, growth and company product that will be at the forefront of their minds. One area that is of critical importance, but is often classed as a lower priority among startup companies is how their company operations are protected in a legal capacity.
There is a misconception that small companies do not need to place legal representation high up in their list of company operation priorities. This can prove to be a fatal mistake for some small business owners because startlingly one in ten startup companies fail due to legal problems – many of which could have been avoided if the startup had arranged for their legal matters to be looked after by their lawyer.
SME Company Creation At All Time High
To put this into context, according to a December 2016 briefing note from the House of Commons, there are 5.4 million small to medium sized businesses in the UK, and these represent 99% of all businesses currently in the UK. Of these, a massive 5.3 million companies are micro businesses that employ less than 10 members of staff – many of these are newly created startup companies.
In 2015, research from StartUp Britain (a government backed enterprise campaign) produced statistics from Companies House that 608,110 new companies were registered (an annual record high) and in 2016 between January and June there were 342,927 newly registered companies.
There is clearly an entrepreneurial trend currently in the UK given the historical highs we see in newly formed company creation. More small businesses are being created than ever before, so it is imperative that those newly created companies seek legal representation. It is extremely difficult to start and operate a small business knowing that approximately four in ten small businesses will fail after the first 5 years so it is important that any current or prospective business owners do not add themselves to that statistic by actively seeking effective legal advice from the outset.
Startup Company Legal Pitfalls
A particularly common reason why a startup will encounter difficulties is when business owners take a “do-it-yourself” legal approach. This is often in the form of buying legal contract templates off the Internet. This may save money at the time, which is a valid concern for owners of startup businesses where financial capital can be limited, but without receiving tailored legal advice there is a genuine possibility that the contract template may not be fit for purpose which could open up the startup to legal difficulties in the future.
There may be situations where the use of pre-existing legal contracts maybe an effective legal solution, but there is little comparison between receiving the considered expert opinion from a legal professional, particularly where complex business is concerned.
Starting a company can be a difficult process for a budding entrepreneur and any successful business owner will confirm that delegation is often one of the trickiest aspects of running a small business. Handing over responsibility to others can be hard for company founders, but as long as that work has been delegated to trusted specialists it will free up the entrepreneur to do what they are best at within the business rather than operating as a “jack of all trades”. Nowhere is this type of effective delegation more prevalent than when hiring a reputable law firm.
Speak to Freeman Fisher
If there is one area in business where a company should not seek to cut costs, it is in receiving legal advice. The accuracy of legal advice received can be the difference between a startup company ultimately succeeding or failing.
Freeman Fisher offer a range of business legal services to startups and SME’s across a variety of service areas and business sectors.
There can sometimes be financial constraints with a new business so Freeman Fisher evaluate the areas of critical importance and ensure that costs are not incurred unnecessarily.
Contact Freeman Fisher for your business legal requirements by telephone on 0161 835 9090, email firstname.lastname@example.org or read more about legal and business support for startups at http://www.freemanfisher.com/sector/startups/