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Running a new business - operating issues

By Warren Bygrave - 29 Nov 2013

Leases, terms of trade and employment agreements - getting the nuts and bolts of operating procedures right at the start is essential for success. Have you covered all the necessary legal areas? Are you satisfied that everything is in order and you are prepared? 

Finally in this series on Going into Business it is important to turn your attention to the legal issues which can be involved once structure and finance has been worked out. These will vary depending on the type of business which you operate. 


If you intend to occupy premises there will be a lease to consider. Is the form usual? Is the landlord asking for a personal guarantee? If so, ensure that you have protected assets which you do not want to be included in that guarantee. 

Is the term suitable? You have to allow time to establish your new business and potentially sell it. A thing to keep in mind is that your liability can continue even when you sell.

Is the building in the right place, does it have the correct amount of space, is the rental reasonable and can you use it for your type of business? All these matters are important if you are to be successful.

Terms of trade

If your business involves manufacturing or services, are your original ideas, products and concepts adequately protected? Do you have terms of trade which adequately protect your goods when you supply your customers? If not, you can end up being an unsecured creditor if your customer's business fails. Good terms of trade will protect you from such an event. If you are relying on having a regular supply of products or ingredients, do you have good formal arrangements in place? If not, do you have an alternative source available?

Employment agreements

If you are employing staff it is important to remember the arrangement between an employer and an employee is not the same as an ordinary commercial arrangement. Do you have good employment agreements which clearly set out the job description, hours of work, holidays and payment terms? It is a legal requirement that there is a written agreement for all employees and that it contains certain terms and conditions. Understanding these is essential. Having an employment agreement that is tailored to your business or at least takes into account your specific terms and requirements can save a lot of time and trouble especially if the relationship breaks down. As you will be aware, employees have a huge influence on the business, good and bad. Dealing with them fairly and reasonably sets a very good platform for a successful relationship.

As I have said in this series, starting up a business is both challenging and exciting. Doing the basics well, having good plans, systems and documents and obtaining the right advice are all essential elements in making it successful. We can help with this.

In any event, good luck!


Warren Bygrave


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