There May Be Trouble Ahead ...
- AuthorCraig Malarkey
A new Prime Minister resides in number 10. A new US President will soon be in the White House. The new Chancellor has set out his first vision for the British economy in his Autumn Statement. Article 50 and Brexit are coming, and who knows what the terms will be?
Whatever your political or ideological values, perhaps the only thing that is certain at the moment is that there are uncertain times ahead. That is not to say that things will be better or worse – because simply put, nobody is sure how these imminent political changes will impact on business and the wider economy.
So, what can businesses do to insulate themselves from this? Predicting the future, particularly at times of political upheaval, is impossible but what we can do is try and plan ahead. The last recession more or less caught all of us off-guard – there was no time to plan ahead., Whether or not the worst case scenarios that are predicted materialise, all business can benefit from some forward planning.
All business owners and directors will no doubt undertake some degree of forward planning. However, it is often the case that the financial side of the business is prioritised at the expense of the commercial and legal aspects. In light of this we set out below some key commercial and legal issues you should be considering now:
Whatever the nature of your business you will enter into contracts. Each product or service you buy or sell involves a contract between you and the customer / supplier. These may be documented in writing but often this is not the case. If something goes wrong, without written terms having been agreed it can be very difficult and costly to determine what the right remedy is for a disgruntled party. If you are dealing with consumers this area can be even more of a minefield.
You should conduct an annual review of your standard terms and conditions or bespoke contracts / agreements to ensure that changing markets, practices or legislation has not impacted on those contracts.
It is also possible to enhance the credibility of your business or even its value and attractiveness to potential suitors or lenders by protecting your income with longer term contracts with customers, where appropriate.
At Tilly Bailey & Irvine we have experienced advisors who can assist you in carrying out a “health check” on your existing contracts as well as drafting bespoke documents tailored to your business and sectors.
Many businesses have evolved from a good idea or a strong individual. Sometimes the business itself can overtake the initial planning and the prospects of making money and getting the “wheels in motion” present an opportunity which cannot be missed. As a result it is not unusual for owners to later find that the structure they have adopted does not ”fit” the business. Perhaps they are operating as a sole trader, where their personal risk is great. Perhaps a shelf company was used to start the business but now the share structure does not allow for the growth in the business.
We can walk you through the various business models available and, together with your accountant and other professional advisors, make sure that you are using the right structure.
We can draft partnership or shareholder agreements, prepare joint venture agreements or assist in the reorganisation of the existing structure.
Everyone wants to grow and those businesses bold enough to grow during times of turmoil are often those that are strongest and best placed to take advantage of market opportunities. However, that growth must be planned, controlled and funded correctly. Otherwise, the consequences can be catastrophic.
We are lucky in the Tees Valley that there are still many funding routes available. We regularly work with the strong pool of local accountants who provide expert advice in corporate finance and funding opportunities. Businesses are also able to benefit from the various grant funds available. Whilst access to these funds is inevitably impacted by the uncertain political horizon, there are several respected and established advisors in the region who have the knowledge and expertise to ensure that possible opportunities are not missed.
It is also important to ensure that your tax is calculated correctly and reliefs are maximised. For example, I have worked with many clients who have taken advantage of the benefits of R&D tax relief to assist with cash flow.
The banks are also available for funding opportunities. If you are able to involve your lawyers early in the negotiation stages, we can ensure that the security offered is tailored and appropriate. We have strong relationships with the major banks, acting as panel solicitors for several household names, meaning we can always provide early stage introductions to clients wishing to explore their funding options.
One question we ask all of our clients is: “what is the plan for the next 5 years”? Part of that plan may be an exit from the business. With early stage planning we can ensure that the process is as smooth and painless as possible, whilst also enhancing the value of the company or business, perhaps by implementing some of the strategies mentioned above. Sometimes, an offer will come along unexpectedly which cannot be ignored but, in the main, all businesses can put in place certain measures which can assist in making that exit more achievable. Working with corporate finance advisors, we can put these measures in place.
Ensuring that you have the best people within the business can be the single most important factor in any venture. Entrepreneur Richard Branson is famously quoted as saying employees should come first, as they will then look after your clients.
What provisions do you have in place to reward your employees? We can advise on the various employee incentives available.
What steps have you taken to ensure your employees cannot poach clients if they leave? In these circumstances we can also advise on employment contracts and the various protections you should have in place.
Perhaps the other side to Mr Branson’s quote is that if you do not look after your employees they can be a huge cost and risk to the business. Our employment experts can help you through the sensitive area of HR, making sure you have the correct policies and procedures in place to minimise any impact on the wider business.
6.Land and Property
Property can be a significant investment for any business. It can also be a huge cost and risk. You should review your existing arrangements for any property your business occupies – Tilly Bailey & Irvine’s property specialists can review and advise on existing lease arrangements; considering break clauses, rent reviews and dilapidations. They can also assist in negotiations around acquisitions or new leases. Our team also regularly advises on property pension SIPPS which can be a tax efficient way to provide for an individual’s pension, (subject to specialist financial advice).
In short, we do not know what the impact will be on the domestic and Tees Valley economies. But we do know that the Tees Valley remains strong and vibrant and that the businesses within it must strive to maintain growth and development. As the longest established and largest law firm within the Tees Valley, Tilly Bailey & Irvine can work with you and your other advisors to assist with that development and growth.