By getting a head start on legalities you’ll face in business this year, you’ll be able to achieve the goals you set out to.
In current times, business is moving faster than ever before. This means that customers will not wait as easily as they may have before; and when the unpredictable happens and your business is not ready or can’t deliver – calamitous consequences may result. So, you and your business’ only choice is to be ready for every eventuality and even more so if you’re an aspiring entrepreneur.
Why plan ahead?
Together with the current challenging economic conditions, potential obstacles unrelated to economic conditions needs to be confronted by every business owner. From the get go, all of your business’ strategies need to comply with certain important legal requirements. These are not the same for every industry, so business owners should be vigilant by ensuring that they are aware what they need to comply with and ensure that they do.
You should also plan for the unpredicted; for those times when something unexpected goes wrong or when the business gets itself into a legal conundrum. Sometimes this is unavoidable, and could cause considerable challenges to a business’ cash flow.
Related: How zero-based budgeting boosts your bottom line
Here are a few things to keep in mind when planning for the year ahead to avoid or minimise the risk of harm caused by a lack of thoughtful planning:
1. Budget for legal costs
Many businesses fail to budget sufficiently in advance for legal spend. In many situations, legal costs are incurred unexpectedly. However, if careful planning and preventative actions were taken early on, many of those costs could have been avoided or at least significantly reduced. Thus, carefully planned legal spend and associated action could go a long way to being a significant investment in the starting phase of your business venture.
Planned legal costs
The complexity and compliance requirements are often underestimated and therefore less is budgeted than what is anticipated would be needed. It is therefore important to make sufficient provision in your financial planning. It is always helpful to consult with your attorney prior to the budget planning phase in order to help with the estimation of legal requirements and the costs thereof.
Not only is consulting with an attorney important, but you should also consider speaking to other entrepreneurs who might be able to advise on industry specific license fees, permits required, filing fees, and more. Being open and willing to ask might save you some time and effort by getting another’s insight on some of the smaller details which are not always clearly decipherable from reading often very complex legislation.
Unforeseen legal costs
Legal complications or problems, also have the tendency of appearing unexpectedly. Thus, no matter how much careful research and consideration has gone into the initial planning of the new year’s budget, there is always the possibility of something unforeseen happening or a dispute needing resolution, which might result in your business incurring legal costs in order to resolve it. These costs are, in most cases, more than business owners think. The fact remains that most businesses do not allow for sufficient cash flow for unforeseen legal costs when they plan for the next financial year.
As already mentioned above, if your business does not have the necessary cash flow to attend to a legal matter immediately, the consequences could be problematic. The business should rather be in a position where it has the resources and not need it, than needing it but not having it at your disposal.
2. Time: Plan for more than you think you’ll need
Very often, the nature of a start-up business or new venture requires quick action and making fast decisions in order to get a “foot in the door” of an often quick-filling market. One should keep in mind, though, that becoming legally compliant takes time.
It is important to know beforehand what type of licenses, permits, contracts and compliance certificates are needed, and then to plan accordingly. Give yourself more time to get these legal matters resolved. Again, an attorney would be able to give a fairly accurate timeline for certain requirements, even though in some cases the deciding factors are governmental or financial institutions, which have to consider the risk or legislative compliance.
3. Choose an appropriate service provider
The legal arena is broad and it is impossible for one attorney to be well versed in all legal fields. It is therefore important to assess what your business and compliance requirements are, and choose the correct attorney or firm of attorneys for the specific task. This is especially true with specialist fields such as commercial law and intellectual property law.
Related: The future of professional services
4. Do not deviate from prescribed legislative or regulatory provisions
This seems like an obvious statement that goes without saying, however, with the frustrations that some businesses face in becoming legally compliant, in some industries more than others, the owners are often tempted to proceed with certain steps even though a specific legal requirement has not been met. This might be done to save time, or start making profit sooner, or many other seemingly valid reasons.
The consequences, however, could be detrimental to the growth of the business. The most obvious being fines imposed on your company, but even more damagingly, reputational harm to either you or your company. It is not easy to place monetary value on your business’ reputation, largely because it is invaluable.
Therefore, even if time consuming, costly, and frustrating at times, work with the correct legal counsel and other advisors in order to ensure compliance, and to be able to run your business within the spheres of the legislative boundaries.
5. If you don’t take the ‘law’ seriously
Despite the prevalence of legal issues facing business, there is an alarming number of business owners who are facing these problems or issues without the benefit of legal advice or representation. Do not become another statistic of a business that failed due to insufficient planning. So, whether for debt collection, foreseen legal compliance or permits, or unforeseen litigation, set aside enough finances for legal costs in the budget for the next financial year.
Businesses need to realise that times are changing, and therefore need to adapt to the fast-paced manner of trading and rendering of services. In order to change with the times and remain relevant, it’s often necessary to reassess your legislative compliance and adjust accordingly. The economy, legislation, and the market’s change, and so should your business.
Allocating time and finances wisely by investing in all aspects of your business with due consideration could make the difference between your business blending in, failing, or becoming a major success.
Budgeting for legal costs should not be any different than any other financial or time planning. Business moves fast, and by applying the above, you will be able to keep up, while staying within the legal parameters. This is only a few basic steps that, if followed, will go a long way in building your business as quickly and efficiently as possible. Make the 2017 financial year a prosperous one, without stressing about legal issues and by planning carefully in advance.