How to prepare your business for bumpier times ahead – Jaron Crooknorth & Alex Lyttle, Tayntons
With widespread economic uncertainty and potentially difficult times ahead, commercial legal expert Jaron Crooknorth and disputes expert Alex Lyttle look at how to make sure your business is in the best possible shape to weather approaching storms.
Jaron and Alex are both partners at Gloucester law firm Tayntons, where they head up the commercial and dispute departments providing legal and business advice to clients based on decades of experience in the sector.
It is most important to consider and see if there are any unnecessary areas of expense where costs can be cut. Staffing is the largest overhead for most if not all businesses. Making employees redundant can be tough but it might be necessary to ensure your business survives and the remaining staff remain in employment.
As an alternative to redundancy, you can speak to staff members and see if they agree to either work part-time or accept a reduction in pay. It is important to take legal advice first to ensure the correct procedure is followed.
Your Premises are another expensive overhead. If your lease allows you could consider renting cheaper premises. If you are unable to move your landlord might grant a temporary reduction to your rent allowing you to navigate temporary financial difficulty.
To generate profit there needs to be cashflow and to have cashflow there needs to be cash. Remember a good customer/client needs to pay you promptly and you should take all steps you can to ensure they do this.
Once a customer/client has not paid you according to your terms of business you should initially contact them to see when you can expect payment. If this is unsuccessful you can take legal action to initially send a letter before claim and if necessary, obtain a judgement and eventually payment from them. As a business, if you have a reputation for chasing prompt payment you are more likely to be paid.
Well-drafted commercial and employment contracts are important. As a business, you need to be able to rely on them when times are difficult. Make sure you have a solid legal foundation for your commercial and employee relationships.
You can review your commercial contracts and see whether there are opportunities to renegotiate or end contracts that are no longer favourable.
Have a plan
A sound plan to prepare for difficult times is crucial and you should make sure you check it on a regular basis.
Points to consider include:
• Setting aside cash to build up reserves
• The possibility of diversifying to make your business more robust
• Consider whether trade credit insurance would be advisable to protect your business from bad debts
Despite the possibility of rocky times ahead, where businesses plan carefully and remain flexible, most will be able to deal with difficulties. Talking your options through with an expert can be helpful and taking action now to prepare and protect yourself will give you the best possible resilience for the future.
Jaron Crooknorth is a partner and solicitor dealing with company and commercial law at Tayntons Solicitors. As head of the Commercial Department, he has wide experience in representing clients in business sales and acquisitions, commercial property transactions and corporate agreements as well as general business services.
Alex Lyttle is a partner and solicitor heading the Employment and Dispute Resolution team. He has in-depth experience of dealing with commercial contract disputes as well as a full range of employment issues.
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