In the midst of a global crisis like the current one, it is understandable if businesses have not placed a high priority on the sort of risk assessment I refer to below.
The reality, however, is that these issues are truly business critical and have to be looked at – sooner rather than later.
Getting on top of these issues will not only help you sleep at night but may well make your business more attractive to potential purchasers once we emerge from the other side of this COVID-19 induced recession.
Running a business is stressful. Is there anything you can do to reduce the stress?
Some risks you can do nothing about. Many risks though can be avoided or reduced.
We set out below a summary of areas you might want to take a look at. The list isn’t comprehensive but it should get you on the right track.
Employment
Review the employment of all staff well before they accrue 2 years service. Terminate those who are not going to make it – but be careful of claims that don’t need 2 years service (e.g. unfair dismissal in some circumstances and discrimination).
Put in place Contracts of Employment for all staff.
Contracts for key staff – Include adequate notice provisions (3 months?); Garden leave; Restrictions on use of Confidential Information; Post-termination restrictions on competing activities.
Upgrade Contracts when staff are promoted or change jobs.
Paperwork – Be careful what you commit to writing. There are various ways (GDPR, disclosure if a claim is brought) in which employees can obtain a copy of documents relating to them (including emails).
Recruitment – this is a key danger area for employers. Be sure to have solid systems in place.
Insurance
Review all your business activities and assess whether they are adequately insured.
Do you insure: Debtors? Infringement of intellectual property rights? Key personnel?
Do you have Directors and Officers insurance? You should.
Intellectual Property
Protect your IPR’s in each jurisdiction in which you operate.
Contracts – with any third parties, employees, consultants etc – make sure they deal with ownership of IPR’s.
Websites, bespoke software etc – ensure you and not the designer “own” the content of your website and any software created for you.
Company issues
Shareholders – Do you have a shareholder agreement or Articles of Association specifically drafted to meet your needs? This is essential to deal with issues such as: share transfers; disputes between shareholders; key decisions; what happens if a shareholder who is also an employee/director leaves?
Insure the lives of your fellow shareholders to provide you with the funds to buy their shares if they die. Being in business with a deceased shareholder’s wife or children is seldom a happy experience.
Tax – Take advice on whether there might be an advantage in restructuring your company/group and assets. We can put you in touch with suitable accountants who can provide initial advice free of charge.
Protecting your assets – Should you protect your key assets by putting them into a separate company to shelter them from liabilities which might affect the trading company?
Trading arrangements and agreements
Agents and Distributors – If you use agents or distributors do you have written agreements? You should have. Are you familiar with the rights of agents/distributors on termination? Have you taken steps to limit your potential liability? If your agents/distributors are overseas: are your agreements subject to English law?; are there any mandatory laws in the various overseas territories which might override what is set out in the agreement?
Status of customers – do you know who is a sole trader, partnership, LLP, limited company etc? Do you need personal guarantees from the members of LLP’s and director/shareholders of limited companies?
Terms and conditions – You must have them; they must be up to date; make sure your staff know how to ensure they are incorporated into contracts; do they limit/exclude liability insofar as possible?