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October 2012
New Workplace Pensions Regulations & Changing Employment Terms
September 2012
Luxury Goods And Services, Website Contracts and Cookies
August 2012
The Olympics and Legal Implications of High Profile Events
July 2012
Hedging, LIBOR and Why Canadian Banks Are Setting Benchmarks
June 2012
May 2012
Employee Incentives and Share Option Schemes
April 2012
Hotels
March 2012
Marketing
February 2012
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Contract Law
Visit Our Archive for previous newsletters covering Hospitality, Recruitment, Intellectual Property, Food & Drink, Commercial Property, Employment, Hotels, Restaurants, Start Ups and many other topics |
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Visit Our Archive for previous newsletters covering Hospitality, Recruitment, Intellectual Property, Food & Drink, Commercial Property, Employment, Hotels, Restaurants, Start Ups and many other topics
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Welcome to our June/July Newsletter!
 | | Photograph of Shainul Kassam by Lucy Elliott of www.lucyelliottphotography.com |
This week I am still recovering (this says more about me than the class) from my recent BARREtoned initiation which in essence is a highly challenging and innovative full-body workout performed at the ballet barre. BARREtoned is also our client of the month, a start up company who took the time and trouble to make sure they got their legals in place at the outset.
We advised them principally on their lease and shareholder agreements. It is not easy for a grown-up start up to set up shop, especially when securing financial backing or a top location, but BARREtoned were successful on both counts.
Setting up in business ideally involves a well thought-out business plan and careful consideration of what might go wrong and how best to deal with it. Our first article explores various issues to think about for would-be entrepreneurs, when starting a new business.
The location of some businesses is intrinsically tied to a location, for example restaurants. For others where this is not the case, they can opt to start life in a serviced office rather than take on traditional leased space. Our second article highlights some important issues and advantages when using a serviced office.
Enjoy the sun - and if you want to get toned for the beach, you know where to go!
If you have any queries or need advice in relation to any of the matters set out in this newsletter or any other legal issues, do not hesitate to call us on
020 3102 6372 or e-mail us at enquiries@fortunelaw.com. We are always happy to help.
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Shainul Kassam
Fortune Law Solicitors
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Client of the Month: BARREtoned
www.barretoned.com
Tell us about your business in a nutshell?
BARREtoned is a full body workout performed at the ballet barre and on mats, creating lean, long muscles and increasing your body's ability to burn fat. Signature results include sculpted arms, chiseled abs, defined thighs and a lifted seat. Our teachers correct each client individually, combining the benefits of personal training with the community feel of a group class. We opened our first dedicated studio in April of 2013 and have quickly created a following of "barre aficionados".
Where did your idea originate?
Barre workouts have become very popular in the United States over the past 5-10 years. We fell in love with the method while living in New York and Esther later became an instructor in Chicago. After moving to London and discovering that nothing like it existed here, we saw the opportunity to create our own business with BARREtoned. We teamed up with a physical therapist to further develop our method. Incidentally, American barre workouts are based on the Lotte Berk method, which originated in London over 50 years ago. We brought the workout back to the UK in an updated and more effective version!
What could we expect from a BARREtoned class?
It's a one hour class which works all major muscle groups. You start with a warm up, upper body work with little weights, press-ups and triceps dips. Then you move onto the barre to work your calves, thighs, seat and core in various positions. You really get your heart rate up here and will feel your muscles shake! We finish with exercises on mats to target your abs and seat. We stretch out each muscle after exhausting it in order to create long, lean muscles rather than bulk.
What obstacles did you come across when starting up and how did you overcome these?
One of the major obstacles was finding the right location for our studio. It took us almost a year and a half, as we had specific requirements in terms of the property itself and the area. We eventually hired help because we felt that we needed someone with experience and connections in the real estate market; that's how we finally found our dream location in Notting Hill.
In your opinion, what are the most important factors when starting a business such as yours?
There are so many things to do that it's important to prioritize and focus on what makes the business successful in the long run. For example, we have high demand for our classes, which makes us want to grow quickly, but it's crucial that we do not compromise on the quality of our classes. Our clients love our class because of the personal attention and corrections, which they do not get in a traditional gym class. That's why teacher training and development is our main focus right now.
How did Fortune Law assist in the development of your business?
Fortune Law helped us design our articles of association and our shareholder agreement. Since we are a team of 2 directors and 2 additional investors, it was crucial to draw up an agreement that was fair to everyone and protected their interests. In addition, Fortune Law helped us in the lease negotiations with our landlord, which proved to be quite lengthy and tiring, so we were glad to have Shainul Kassam on our side. In addition, Shainul's general sense of business and contacts have also helped us in terms of several decisions outside of the traditional legal scope of her work.
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Starting A New Business 
Starting a new business can be a daunting experience to many people, some of whom have had an ingenious idea at the back of their head for years, but never had the chance to put pen to paper. Other people dream of having their own business but have no idea what it is they want to do, or how to start. A third set simply jump straight in.
Critically what you need to get the ball rolling to starting up a business is a strong belief and commitment in your business idea. This is essential to keep you focused when things go awry. Having carried out research into your target market or your product or services you should have some idea of the strength of your proposition. From this you should ideally develop a business plan setting out your prospective clients and customers, routes to market and financials including cash flow forecasts and initial start up costs. Factors that are not considered from the offset can result in delays and unbudgeted costs can be the difference between a successful business and a failed idea.
It is important to be aware of what finance you will need to start up and explore your finance options. You might be able to fund your business from your current salary if you are still in a day job or you might have savings that you can put into the business. However that is not always the case and there other methods to consider:
- Family and friends - You could borrow the money for your business from your family and friends. This can be handy because they may not charge interest, but it's still a good idea to draw up some paperwork confirming how much they're going to lend you, and when they want the money back by.
- Bank loan/overdraft - To keep the business funding on a more formal level, you might want to look at borrowing some money from the bank. For long or medium-term funding this is likely to be by way of a loan. For more short term funding it will will usually be via an overdraft. However, the bank will want to see a business plan to assess how serious you are. The bank eventually wants to be repaid.
- Grants - Depending on the nature of your business, and where it's based, there may be grants available. It is worth discussing with your local Council to see if you can take advantage of any of them. There are a large number of businesses both start ups and long standing who never look into this option which could save them thousands of pounds.
- Outside Investors - Business angels can provide low to medium funding, whereas venture capitalists can offer higher levels of investment. They will bring finance to your business and can also provide skills and expertise.
Before you start your business it's important to decide how it will be structured, legally and for tax reasons. Which structure you choose for your business depends on several different factors and how important each one is to you.
- Sole Trader - This is the simplest set up which is why some people opt for this structure. Legally there is no difference between you and the business. So unfortunately if the business is sued, it's you that are sued - and your own assets can be taken to pay the debt if you are held liable. The tax liability for a sole trader can also be higher than if you run your business through a limited company.
- Limited Company - The limited company is a very popular structure. This is due primarily to limited liability in that shareholders are not held responsible for a company's losses should it fail and their liability is limited to the sums they have invested. In addition, all other things being equal, running your business through a limited company can result in less tax being payable overall than if you were a sole trader, if you are careful to take money out of the company in the right ways and not to excess.
- Partnership - A partnership is similar in many ways to a sole trader except there is more than one person involved in running the business. The partners are what's called "jointly and severally liable" for the business's debts, because, again, there is no legal difference between the business and the partners.
- LLP - The LLP is like a partnership except that it's a separate legal entity from the partners in similar vein to a company. That means that if the business is sued, the partners' own personal assets are safe and can't be seized and sold to pay the business's debts - unless the partners have given personal guarantees or been found guilty of wrongdoing. This is becoming a popular option.
For each type of structure, there are certain regulations that must be adhered to, for example, whether or not to register with HMRC, whether you need to register with Companies House, and what documents and when need to be filed and with what body.
Even if you are staring off solo, there will invariably be a number of people underpinning your business. These could include individuals you start off in partnership with such as investors/shareholders, key contacts you may use to help you get going including assisting with viral marketing or whose black book you can tap into. Think about who you know who might be able to help you get off the ground or along the way. This could even be a competitor whose business is so established and who has been around so long they are happy to assist you or mentor you.
Other key individuals include advisers whether they be property agents, accountants or lawyers. Ask for recommendations from others who have used their services and seek guidance on the likely fees for the first 12 months of your business to help you plan. Try and negotiate fixed fees where possible for certainty.
Finally, and key to any business - staff. These can be hard to find and even harder to keep sometimes. Bear in mind you have legal obligations to employees and make sure they have a written statement of the terms of their employment within 2 months of starting (as required by law).
A marketing plan is an important element for start ups, as it is essential for new businesses to market themselves in a cost-effective way. The plan should:
- define your market
- define your customer type
- identify your niche
- define your message and unique selling points (why should people choose you?)
- schedule your activity and budget by month
Once these points are established, work out your detailed plan and costs based on what you need in terms of communications and marketing materials for your first year and how you will track the return on investment of your marketing budget - for example, website traffic, the number and potential value of incoming enquiries and press coverage could all be very useful measures as well as actual sales revenues.
It is particularly important nowadays to think about digital marketing channels - search engine optimisation, influential bloggers, review sites, social media like Twitter and Facebook, LinkedIn for online business networking - if you don't have someone internally who understands how these important channels work then it's worth getting some expert advice. Our own expert advisor Caspia Consultancy Ltd. has agreed to give any Fortune Law client a free 45 minute telephone consultation - see www.caspiaconsultancy.co.uk .
Premises
Choosing the right type of premises can make or break a business. The first big consideration, of course, is whether you actually need them, at least to begin with, when you're trying to get established and keep your costs down. A lot of people choose to start up from their home, but logistically this can be impractical due to domestic distractions and if you employ staff there could be health and safety issues. We advise that you talk to a reputable advisor such as System Concepts if you are thinking about having employees who work from home.
The next step could instead be to rent a space in a serviced office. They have become increasingly popular over the past few years, as you can normally negotiate a fixed fee.
When you are more established, it may be beneficial to discuss whether you wish to opt for a lease of premises or should your business be flourishing sufficiently, even buy a property. There are many benefits and drawbacks to both options, which are described in our next article below, "To lease or not to lease".
If you need advice or assistance in setting up a new company, please do not hesitate to get in touch : 020 3102 6372 or enquiries@fortunelaw.com |
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As mentioned in our previous article, setting up a new business requires thought and foresight. If you are thinking about taking the leap and renting an office space, this is a significant consideration and can be a costly overhead.
If you wish to commit to taking on a commercial leased office, there are various points important to consider:
- Is there a legally binding agreement? This is usually in the form of a commercial lease and includes various obligations (primarily from the tenant) and responsibility for a given time period. The lease is normally drafted in favour of the Landlord; however you may be able to negotiate certain terms including the lease length, rental increases, options to renew and break clauses. We would encourage legal advice be taken each time as leases are long complex documents heavily weighted in favour of the Landlord.
- Can you afford it? It is important to establish all costs from the outset, not simply the rent, but also items such as service charges, business rates, maintenance costs and insurance.
- What do you know about the property? You should make enquiries of the Landlord including carrying out a site visit to see the physical state of the property, carrying out a search on the Landlord to ensure it does indeed own the property and if they own other properties, and making enquiries of other tenants in the building as they can be a great informal source of information as to how the building is managed.
- Is the building right for you? Evaluate the building's geographical location, the space available, and the type of building. If you have clients that will visit, the building needs to give good impression of what you wish to represent to your customers. You should also consider is it big enough for both current needs and foreseeable growth, as if it is your intention to expand before the lease ends, it can be costly to move again.
Serviced Offices - The New Trend
An alternative way for new businesses, and even existing companies, to rent office space is through the use of serviced offices. One of the main reasons why many businesses choose to take space in a serviced office is flexibility it gives them. Conventional leases, which typically last for ten or fifteen years, tie businesses in to their offices. This means that if during the life of a lease, a company's space requirements change - whether they need to expand or contract - they are unable to adjust without incurring significant costs, administrative issues or delays.
Serviced offices don't just offer businesses a temporary office space solution or small businesses a desk while they are starting up. They also offer permanent solutions to businesses of all sizes because of the flexibility they allow and the services that they provide, taking the hassle and administration out of office space. Increasingly, serviced office space is able to offer a whole range of office solutions whether that is an out of town open plan space or a state of the art, contemporary office right in the centre of London. They also offer businesses simple and transparent pricing that can provide real value for money when all the costs associated with long-term leases are taken into account.
If you require any assistance in a new or existing lease, please do not hesitate to get in touch: 020 3102 6372 or enquiries@fortunelaw.com.
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