According to the UK government, the definition of small and medium sized enterprises is any business that has fewer than 250 employees. In 2016, there were approximately 5.5 million SMEs active in the UK, while smaller enterprises make up more than 99% of all ventures.
This number includes quite a large diversity of businesses, including the UK’s growing army of start-ups. These firms face the biggest challenge of all, however, as they must create an agile and compliant business model that can drive sustainable success.
In this article, we will look at the issue of legality, and the main legal issues facing start-ups in the modern age:
- Understanding and complying with employment law
If start-ups need to understand one thing, it is the importance of complying with employment law. After all, it is estimated that the average time it takes for a tribunal claim to clear is 30 weeks, while the cost to a business is approximately £8,500.
It is therefore crucial that you comply with employment laws, but this is far easier said than done. The first step should be to ensure that you understand the very latest laws and legislation, so that you can comply effectively and prevent your business from being placed at risk.
Creating an agile business model is also important, as this enables your start-up to adapt quickly as and when required.
- Decide whether or not to employ an in-house legal team
Ultimately, creating an in-house legal team may seem like a relatively lavish expense, but it may be necessary depending on your precise area of business and the exact status of your venture.
If you operate in a tightly regulated sector (such as financial services, which is controlled by the FCA) or consumer electronics, for example, you may need to employ a compliance team to guarantee the integrity of your products. When you start out, it is also imperative that you establish a series of processes that enable you to comply seamlessly with regulations as your company grows.
In more relaxed industries, you may be able to outsource legal tasks on the basis of each individual project, saving money and reducing your annual wage bill.
- Protect your logo, trademark and intellectual property (IP)
Before you begin to launch products and raise awareness surrounding your brand, you will need to ensure that your businesses core assets are safeguarded.
If your businesses products or services are truly unique or underpinned by technology that you have developed yourself, there may be elements of intellectual property that require protection before you bring them to market. More specifically, you may need to invest in one or more patents to prevent competitors from adopting your ideas, while relying on expert legal advice to guide this process.
On an even more fundamental level, you must also protect your logo, brand and domain address. Your businesses logo should be registered as a trademark, for example, as this safeguards the visual identity that you have carefully cultivated over time.
In the case of your domain address, you may also want to consider buying similar domains to prevent potential rivals from competing directly with your business. If you have a .com address associated with your brand name, for example, you should also invest in the .co.uk and .net alternatives.