Minimising risks when Starting a Business

Lisa Rosen recently wrote an interesting guest blog post on Onstartups, which gave an insightful analysis into the benefits of starting your own business. She controversially states that not going into business and remaining at your day job, is actually more risky than the alternative. She hangs her article on a quote from Robert Gronock, ‘he who sleeps on the floor will not fall off the bed’, as a useful analogy to explain the trade off between staying in your job versus deciding to make it on your own.

Starting your Own Business

With the Internet revolution and consequent changes in society, large companies are increasingly maintaining a smaller core of staff. Some partner with other companies or outsource when they want to deliver projects requiring larger teams.

Consequently, there are increasing opportunities to work as a consultant, or to turn to self-employment and entrepreneurship.

Some consultants, especially in the IT industry, are able to rely on servicing the needs of larger global organisations given the reduced overhead counts of these organisations, and their constant need for additional resources.

Startups 

In the beginning, many start ups just have an idea.

Individuals setting up a business may be on a tight budget, while others may be well resourced, having worked in full time employment before leaving to work on a business they are passionate about.

The UK government is positively encouraging this trend and sees entrepreneurship as a key way to employment creation and growth within the economy. The Hargreaves terms of reference  were motivated by the Government’s desire to remove any legal impediments to business in the digital age.

The Hargreaves report envisages that reforms to the national and international IP system can promote innovation and growth and add up to £7.9 billion to the UK’s economy. The changes have the potential to add up to 0.6 per cent to annual GDP.

The number of people setting up in business is increasing all the time, and even accounting for the number or companies closing down, there is an overall rise in the number of new businesses.

Building a Safety Net

As Lisa’s article highlighted, starting your own business can open yourself up to potential failure. However, there are certain precautions that can be taken to help minimise this risk.

Namely, it is important to protect the assets you create when building a business through the use of IP. A recent survey by the UK Intellectual Property Awareness Survey 2010 revealed that small businesses are effectively unaware of the IP system.

This lack of awareness can and has caused some businesses to fail unnecessarily.

For businesses who aspire to grow into a larger company which is successful not just locally but internationally, it’s essential to pay attention to IP.

Managing legal resources

For those on a limited budget when starting out, consider your priorities and spend resources appropriately both to manage legal risks and to get the business off the ground.

In terms of spending on websites, it’s best to start small at proof of concept stage. Using a WordPress platform can be a good option as these sites are easily tailored around a new visual identity later, allowing you to start affordably and readily adapt the site later. It’s very easy to change the design of an existing site.

Legal advice 

Relying on Google for legal advice rather than on lawyers is a risky strategy. Legal information though seemingly within easy, affordable reach, can be out of date and incomplete. And most importantly, you don’t know what you don’t know, so how can you search for it?

It is feasible to manage your legal work cost effectively, depending on the nature of the project and the compromises you are willing to make.  The best way to do so is to start by taking overall guidance from a trusted legal adviser with whom you could work later as your business grows. Until then you would be able to do your own legal work, if that’s what you want to do.  Not everything of a legal nature can or should be managed without qualified legal input.  Many IP rights fall into this category.

On the other hand, if you have no legal input from someone who understands the legal landscape that’s relevant to your project, you could unwittingly neglect important legal issues. Neglect might easily end up costing you ten times as much on litigation or other legal work later sorting out problems.

Conclusion 

So how do you ensure that you don’t fall off the metaphorical bed?

Understand that there are certain risks that come with starting a business; implement a plan to manage them, identify the work you will do yourself and work you will delegate to a lawyer or postpone. This can help create a safety net that is vital for all start-ups and can help ensure that starting a business involves fewer risks and more gains, giving you a blissful, undisturbed night’s sleep, so to speak.

This blog is part of a series which discusses IP law in relation to starting a business