Most startups start with good intentions to do everything right, right from the start. Yet the first fast and frantic days of running a business can be so busy and fraught with challenges that some of the basics get left for a while (or even forgotten altogether). The trouble is that putting off the essentials can come back to bite down the line. Luckily for you, at Geniac we’ve seen it all so here are our top “out of the gate” business mistakes. Remember other people made them - so you don’t have to.
1. Not getting it in writing
The beginning stages of forming a business can be exhilarating and hectic but just because you and your co-founder have known each other for aeons doesn’t mean that you don’t need a shareholders’ agreement. “Most people think that making a shareholders’ agreement is something for farther down the line but you really want to make them in the beginning,” says Geniac co-founder Mike Galvin. “Circumstances can change. Say one founder wants to move on later but believes they deserve their shares because of the effort they’ve put in to-date, well then you could have a serious problem.” If a shareholders’ agreement is made in the formation stage of your company then you will have a set of rules and procedures to follow when the going gets tough. Think of it as a pre-nup - hopefully you won’t need it - but it’s always there if you do.
2. Time Wasters
“In the flurry of things new entrepreneurs need to do, one of the top mistakes they make is misallocating their time,” says Geniac business manager, Matthew Wood. “An average of 40 pc of a small business owners’ time in the UK is spent just on admin, that’s at least two days per week.” Knowing when to outsource or delegate the back office work is key to giving entrepreneurs the time to plan their next steps.
3. Employing like a grown-up
Need employees? Then you need an employee handbook. Often overlooked or dismissed as pointless, a handbook is actually an essential part of hiring any staff. Handbooks contain a set of policies outlining what you expect from your staff and the procedures for any disciplinary action. You may dismiss this as a “nice to have” but the reality is that if you don’t have one in place there will be nothing to fall back on in case of a dispute. “Most statutory guidelines are designed to protect the employee not the employer,” says Geniac legal expert, Liza Hunter. You have been warned.
4. Gambling without insurance
A lot of startups and small businesses assume they don’t need insurance in the beginning: that is the very definition of risky business. If you don’t have business insurance, as a business owner, you will be personally responsible for anything that goes wrong at the workplace. “Most insurers offer a business package pretty cheaply (some as cheap as £10 a month) and this is generally what new small businesses will choose to go with,” says Galvin. “These packages will cover things like employer’s liability, public liability, office insurance and sometimes a bit of travel and personal liability.” Whatever you choose make sure you’re adequately covered. Some businesses may need specific insurance - for example cyber liability if you’re doing most of your trading online.
5. Websites: crossing the T’s and dotting the I’s
Most companies set up a website early on, but many don’t realise the legal obligations that go along with having one. Things like website terms and conditions and privacy policies are often done badly - or not at all. “For a marketing website these are pretty simple,” says Galvin. “However if you are entering a contract with a client for example providing a service or selling something, they get more complex.” If your website is collecting and storing any kind of data (and many business websites are), then you need to be registered with the Information Commissioner’s Office. If you don’t, the cyber liability insurance you so diligently purchased may be null and void.
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