Between March 2016 and March 2017 the number of businesses registered for VAT and/or PAYE grew by 7.4%. Since 2012 the number of registered businesses has increased by around 350,000. But the number of sole traders and partnerships has steadily declined during the same period.
In many ways this is encouraging news. But what we also know is that, statistically, at least 40% of these businesses won’t be here in five years time.
In some cases, this will be part of a plan. Perhaps somebody might become the sole employee of their own business after leaving regular full time employment. They may do this for a few years before retiring.
But many will fail when they might have succeeded.
Why Startups Fail
The biggest cause of startup failures remains cashflow. Sometimes this is down to over-optimistic sales projections and sometimes down to something simple such as failing to align major outgoings with the invoicing cycle. Late payment of invoices by customers in particular is a growing problem.
Even where there is a profitable business model your business can run out of cash if you can’t collect payment from customers quickly enough. Correctly worded and enforceable terms and conditions make you better placed to collect what you are owed.
Other common issues include a lack of effective marketing, not having a truly original product or service, or simply the pressure of having to be competent at too many things with not enough time.
Partnerships carry additional risks. Too often they are set up entirely on trust without formal contracts or understandings. This can result in the entire venture failing when one of the partners wants to withdraw.
Employment contracts can be another significant distraction when you are trying to build a business. If you don’t know what you are doing, it’s all too easy to end up in a costly and time-consuming tribunal.
PowellsLaw is proud to play our small part in supporting the growing entrepreneurial culture in the UK. To help you safely over the first steps of setting up your business in a legally compliant way we’ve created three levels of business start up packs as follows:
- The sole trader package includes T&Cs and a contract of employment.
- The partnership package includes T&Cs, employment contract and the partnership agreement.
- The limited company package includes everything you need to establish and register your company plus T&Cs and employment contract.
These packages should help you save more of your energy for the task of building a successful business. We can also meet more specific needs with a tailored package of documentation and advice at a competitive cost.
You can read more about our startup business packages, or give our experienced team here at PowellsLaw a call on 01934 623501 and we’ll be happy to advise you.