Originally written by Louise Hebborn on Small Business
The impact of coronavirus has wreaked havoc on business and economies around the world. In the UK, we are now in the deepest recession since records began and the World Bank expects a global economic contraction of 5.2 per cent in 2020.
As many longstanding businesses fold and high street names fall into administration, it can be a daunting time to consider starting a new venture.
#1 – Finding gaps in the market
Often during periods of uncertainty, we find there are problems and issues which need addressing now. We saw how many companies responded to the need for protective equipment, including masks and hand sanitiser over recent months and used this compelling consumer demand to grow their businesses.
As we continue to navigate our way around this “new normal”, gaps in the market will start to come to the surface. If you can identify those gaps and act to fill them, it may give you a strong head start.
#2 – An agile and nimble business
As a new business with relatively small outgoings and limited financial overheads, you may have more flexibility than your competitors. If you operate online, rather than having a physical office location, and the cost which comes with that, then you may already be in a stronger, more agile position than others.
Many firms and consumers are looking at reducing expenditure during a recession so if your product or service can save them money and is equal to – or better than – what they had previously, you stand a good chance of attracting their business.
It’s crucial that you have a solid grasp of what your competitors are doing and charging. How can you differentiate yourself from the crowd? You should also look at doing some break-even analysis and work out your profitability margins to ensure you have the ability to tweak prices as and when needed.
#3 – Take advantage of a deep talent pool
As we’ve seen here in the UK, the coronavirus epidemic has had a profound impact on people’s jobs. As many companies wean themselves off the government’s furlough scheme, redundancies and lay-offs will be a persistent issue. This means there is an abundance of talent ready and waiting for that next opportunity and eager to help take your business to the next level. If you know you have to make some key strategic hires in order to realise your business ambitions, now is a great time to do so.
#4 – Innovation is key
One of the common traits of some of the most successful small businesses is their ability to innovate. Those businesses with collaboration and creativity at the heart of their cultures can generate new ideas that deliver improvements in product and process and ultimately fuel their growth. We only need to look back at the last recession to find businesses that used innovation to their advantage. Uber and WhatsApp both began trading in 2009 and look at where they are now.
#5 – Business resilience
Finally, getting your company started during a recession is a sure-fire way to building a more resilient, lean and efficient business. Habits learned during a recession often stay in place through more prosperous times, helping to create a robust business much more capable of navigating future bumps in the road.
4 legal steps you have to take
So, you’ve decided to take the plunge and make the most of your entrepreneurial spirit but starting a new business can seem like a logistical nightmare with a seemingly never-ending list of tasks to complete, but it doesn’t have to be.
Here are four areas to get started:
#1 – Consider the structure of the business
Whether you’re a limited company, a sole trader, a partnership or LLP, your new business can be set up in several different ways. Consider the best structure for your business now and in the long term.
#2 – Prepare your terms of business
This is essentially the contract between you and your customer. Terms of business are important for determining what your business is required to provide, ensuring that your business gets paid and for limiting your business’s liability if things go wrong.
#3 – Support for any employee
If you’ve taken people on to help grow your business, it’s important to have an employee statement of terms in place so that both parties know their obligations. A company handbook sets out various policies and good practice which – if followed by you and your staff – should limit any potential claims brought against the company.
#4 – Get insurance cover
If something unexpected happens in your business and you’re not insured there’s both a financial and a legal implication: you could be committing an offence and face penalties. So, ensure you have adequate insurance which covers professional indemnity, employer liability, building and contents cover, fleet insurance for vehicles used on business, and credit insurance to protect against non-payment. It’s worth seeking out an insurance broker to assist you with this.
Louise Hebborn is a partner and specialist in commercial law at Stephensons Solicitors