Running a small or medium-sized business comes with its set of challenges, not least of which is ensuring your legal foundations are rock-solid. With over half of micro businesses facing significant legal issues annually, the question isn’t if legal challenges will arise, but when. In this blog, we’ll guide you through essential legal safeguards that not only protect your business but also pave the way for its growth and success
55% of micro businesses experience a significant legal problem in any one year of their business, with the average cost of that significant legal problem costing nearly £7,000, according to the Legal Services Board Survey.
Are you a small or medium-sized business owner wondering if legal safeguards are truly necessary for your business’s survival and success? Many entrepreneurs find themselves in a similar quandary, juggling the demands of running a business while overlooking the critical aspect of legal protection. However, neglecting legal safeguards can lead to dire consequences down the road.
Suzanne Dibble, a multi award winning business lawyer, author of ‘GDPR for Dummies’ and founder of Legal Buddy, shares her insights into all things small business law. Suzanne is particularly commercially minded and entrepreneurial in her outlook, having worked with Richard Branson, Simon Woodruff and many other famous entrepreneurs.
In this blog, Suzanne offers practical, jargon-free solicitors advice aimed to help small businesses with their day to day business law requirements.
“The majority of entrepreneurs and small businesses do not put legal protections in place until it’s too late.”
The Reality of Legal Risks
As a former mergers and acquisitions lawyer turned small business advocate, I’ve witnessed first-hand the repercussions of ignoring legal protections. Despite the common misconception that legal issues only affect larger corporations, statistics show that a significant portion of micro-businesses face legal problems each year. From contract disputes to GDPR compliance, the risks are real and can have devastating financial implications.
The Cost of Inaction
Many entrepreneurs delay implementing legal protections due to perceived complexities, costs, or simply a lack of understanding. However, as I’ve seen time and again, the cost of inaction far outweighs the initial investment in legal safeguards. Ignoring legal risks may seem convenient in the short term, but it’s a gamble that can jeopardise the future viability of your business.
‘’When it becomes urgent, it’s often too late. Or at the very least, it’s going to cost you an awful lot more money, time, stress and the diversion of your time away from growing your business.’’
Learning from Experience
I’ve personally experienced the consequences of overlooking legal protections during my early days as a business owner. Despite my legal background, I fell victim to a client dispute that nearly derailed my business. It was a wake-up call that underscored the importance of prioritising legal safeguards from the outset.
The Seven Fundamentals of Legal Protection
To help you navigate the complex landscape of legal protections, I’ve distilled the essential elements into seven key fundamentals:
- Client Contracts: Your first line of defence in safeguarding your business interests and clarifying expectations. Best practice is to either consult a lawyer or to use a trusted template with some good solid guidance around it.
There is no regulation over who sells templates online and legal templates online – so you do have to really look into it and make sure that there is a trusted source behind it. - GDPR Compliance: Ensuring compliance with data protection regulations to mitigate risks and build trust with customers. Get the compliant privacy notice in place, get the right cookie consent mechanism and cookie pop up, and data processing agreements in place.
- Content Protection and IP Protection: Safeguarding your intellectual property assets from infringement and misuse.Content protection and IP protection is key, at whatever stage of business you’re at – even something as small as your business logo needs consideration.
- Credit Control: Establishing effective credit control measures to minimise late payments and financial risks. Have a clear credit control procedure, and act on it immediately.
- Trademark and Brand Protection: Securing your brand identity through trademark registration and proactive brand protection strategies. If somebody else came along with the same or similar name, doing the same or similar things, and it was likely to cause confusion in the marketplace, would that potentially affect your business? If the answer is yes, then it is absolutely time to start thinking about trademarking.
- Contracts and Employees: Understanding the distinction between contractors and employees and ensuring proper documentation is in place to mitigate legal risks. The HMRC Status Indicator is a brilliant tool where you can check employment status.
- Legal Structure: Evaluating the optimal legal structure for your business to maximise protection and tax efficiency. I would encourage sold traders to start thinking about when is the right time to trade through a limited company, what are the liability protection and tax benefits.
In today’s competitive business landscape, legal protections are not just a luxury but a necessity for long-term success. By proactively addressing legal risks and implementing robust safeguards, you can safeguard your business’s future and focus on what truly matters—growth and innovation.
Remember, investing in legal protection today can save you from costly legal battles tomorrow. Don’t wait until it’s too late—protect your business now.
For comprehensive guidance on navigating legal complexities and protecting your business interests, head over to Suzanne’s website below.
