Getting your business in good legal shape for 2023

As we welcome in a new year our minds often turn not just to personal resolutions, but also to the goals that we want our business to achieve this year, explains Cognitive Law.

Whether you’re a fully-fledged business owner or looking to start a new venture this year, now is the perfect time to take stock and get your house in order. Then you can get on with achieving those goals.   

This may sound somewhat of a chore, so to help you on your way we’ve put together some helpful tips on how to get your business in order to hit the ground running for 2023. 

Already running a business?

1. Look at the business plan

You may think you are completely au fait with your business plan, but when was the last time you actually looked at it properly? Go back and reacquaint yourself with your goals, objectives and strategies, to give you an idea of where you are against them. Congratulate yourself for those you have achieved and set new goals. Identify areas you are underachieving in and put together a step by step plan of how you are going to overcome them. This will focus your attention on where you are now, where you want to be and how you are going to get there.

2. Set new goals

Goals keep us motivated and give us something to focus on and work towards. Setting effective and achievable business goals is at the heart of any good business goal strategy. They might be personal income goals that are dependent on the success of the business, they might be an exit plan or you may have other growth goals. Whatever they are, remember to keep goals SMART – Specific, Measurable, Achievable, Relevant, and Time bound. Then incorporate them into this years Business Plan. 

3. Review your cash flow

Cash flow is vital for the survival of any business. Look back over the last 12 months and identify how much revenue came in, how much was spent on outgoings, and how much was left for profit. Look at whether your outgoings have increased and if so, why. Can you trim them to increase your profitability? Ensure you have tax reserves or that you have budgeted for tax over the coming year. Make sure you have headroom between your income and outgoings so that if your income decreases andyour outgoings increase, you are still solvent. With a firm grasp on the basic profitability of the business and a well-rounded view of your cash flow, you can focus on the real activity for the year ahead. 

4. Tidy up your accounts

It’s therapeutic to start the new year with a clean slate. If you can, settle any unpaid accounts and reduce your aged payables ledger. Collect all outstanding accounts owed to you, to maximise your income. Don’t bury your head in the sand! Having a strict credit management policy is key to keeping the cash flow coming into the business. Follow a simple credit control procedure and minimise the chance of debt recovery. Tie up financial loose ends and know where you are going forward. 

5. Review your pipeline

If you were busy last year, you may have overlooked building this year’s pipeline. Marketing efforts should take place throughout the year to enable the pipeline of incoming revenue to flow smoothly. Taking some time at the beginning of the year to review what is in the pipeline will either reassure you, or re-ignite your marketing activities. 

6. Keep up to date with the law

Keep on top of any changes that may affect your business, either operationally or financially. Check there are no changes in the law heading your way which may impact how you do things or your plan for the year ahead. Having a basic understanding of the law in your business sector will allow you to make better and more informed decisions. 

Starting a new business this year?

If 2023 is a year of change for you and you’re grasping the opportunity to go into business with a trusted partner, you will need to ensure these 4 points are carefully considered at the outset: 

1. Business structure

Partnership? Limited company? Limited liability partnership? There are a number of ways in which you can trade and share profits and losses in a business. Depending on your circumstances, there are tax advantages and disadvantages, and differences in reporting requirements. You may want to consider the ease with which the business relationship can be changed or brought to an end; and whether you want your information to be publicly available. Chat the differences through with an adviser to make sure you set the foundations of the business securely before you build it.

2. Document your expectations

Keeping arrangements between business partners ‘loose’ and ‘flexible’ are all very well BUT what if you both come away from a meeting with a different view of what has been agreed? Have you thought about profits, losses, investment, minimum time to be spent, decision-making, differences in opinion on direction? Whilst you may think that you’ll just be able to agree anything, it’s surprising how polarised views can become, or how misunderstandings at the outset can cause big problems later. If it’s all written down, everyone knows where they stand. Agreeing and formalising the business relationship at the outset ensures everyone knows where they stand. 

3. Set out your stall

Make it clear to your buyers or clients how you do business. From payment terms to complaints, it’s crucial to clearly document in your terms of business the basis on which you are trading. 

4. Business Protection

Negative thoughts couldn’t be further from your mind but are so important to consider and guard against. What will happen if one of you dies? If your spouses or partners have a stake in the business, what happens if you divorce or split up? What if one of you becomes incapacitated, or your business interests are simply no longer aligned? Not thinking about these possibilities, and more importantly not documenting what will happen, is common and can result in not only animosity and stress but an unnecessary, lengthy, and expensive Court case to resolve matters. 

Having difficult discussions at the beginning of a business relationship can save a world of paid if it ends. 

Whatever 2023 brings, Cognitive Law will be here to help with any legal advice you may need for your business. Please do not hesitate to get in touch with us on 0333 400 4499 if you think we can help.

www.cognitivelaw.co.uk