Throughout the world, it is arguably the small and medium sized businesses that form the backbone of most economies. Jersey is no exception to this rule.
According to the Jersey Chamber of Commerce, a clear majority of local businesses some 7,500 fall into the category of small to medium sized businesses. In the United Kingdom, small and medium sized businesses account for an astonishing 99.9% of all private sector businesses.
It is clear, therefore, that here as much as elsewhere, a strongly performing small and medium sized businesses sector will underpin a successful economy.
Businesses of all shapes and sizes, across all sectors, have faced a multitude of challenges over the past few years with the economic downturn, and indeed here in Jersey start-ups and small and medium businesses continue to face significant challenges if they are to grow and develop, despite recent upturns in confidence.
There appears to be a growing acknowledgement in Jersey for the need for greater support for smaller enterprises in order to help get the moving in the right direction and this to provide a solid foundation for the Jersey economy. However while Jersey ministers promise less red tape it is fact of life that regulation is becoming more prevalent not less. It is to be welcomed that the market locally is shifting to providing specific solutions for Jersey start-ups and small and medium businesses.
There are many challenges facing the Jersey start-ups and small and medium businesses whether it be legal, regulatory or financial and that is notwithstanding the main objective of making a success of their business venture.
By way of example research by the JEP at the end of 2013 showed that at that point up to a quarter of small and medium sized businesses were reliant on hand-outs in order to finance themselves, showing again that in this area, as with many others, there is much more that needs to be done to support small and medium sized businesses and maintain local employment. A recent survey of 500 by an insurance firm of such local businesses showed that one in four small and medium sized businesses had reduced their prices in the three-month period from April to June, and 15% had had to make redundancies, which illustrates the magnitude of the headwinds that Jersey small and medium sized businesses must still confront and overcome
It is encouraging that despite a number of hurdles Jersey appears to be experiencing a surge of entrepreneurs looking to start up or develop businesses whether this be in a traditional sector, IT or e gaming or the like.
Developing an idea for a business is one thing but there is also the legal, regulatory and financial frameworks that need to be put into place to ensure that your idea has the support to make it a viable business.
The old adage that you don’t know what you don’t know is apt here. However a key factor of seeking advice is cost. There are now government back organisations such as Jersey Business who can assist with such issues or firms in the private sector such as Parslows and its associates who can provide tailored solutions at cost effective rates for start-up and small and medium sized businesses. Investing in advice at an early stage can prevent serious headaches later on.
While a small and medium sized businesses team such as Parslows SME cannot provide you with advice as to the viability of a business idea what we and others can do is provide you with the foundation blocks in relation to legal and regulatory issues.
One important decision is how to structure the business. Not all firms wish to set up limited liability companies. They may wish to consider a partnership or indeed trade as a sole trader. There are pros and cons with each type of set up but consideration should be given to each of these options. Ensuring you structure the business correctly from the outset can save you a lot of headaches in the long run. By way of example one area that is typically neglected is the necessity of entering into a shareholder’s agreement or partnership agreement. Whilst fellow entrepreneurs will set out with the best of intentions, relationships with business partners aren’t always smooth and can deteriorate. For example what would happen in your business if the director or partner who deals with a core part of the business decides to leave and with that declares that he will be taking ‘his clients’ with him or indeed what happens if you don’t have a mechanism for dealing with sale of a business? Ultimately you could end up with no business at all. Having a shareholder’s or partnership agreement in place ensures you can control what happens to the business in the event of such a breakdown. A recent survey indicated that many start-ups do not enter into formal agreements such as shareholder or partnership agreements.
Another important factor to consider is whether regulation affects your business. Regulation comes in all shapes and sizes. The mere set up of an undertaking in Jersey requires that you obtain consent to trade. While consent will permit you to employ Jersey residents you may face problems should the skill base you are after not be available in Jersey. This could provide a start-up or small medium business with an issue especially if they are seeking to expand.
Other considerations that need to be factored in, especially as a start-up is now to engage staff: will you take the risk employing full time, part time or consider zero hour contracts ?
Having employed you need to be aware that if you experience difficulties with employees you must follow procedures to ensure that employees rights are not infringed.
Moreover in many sectors of Jersey business there are now industry specific regulations and again a start-up or small to medium business should be alive to these issues and any developments therein. It is essential not to fall foul of regulations as this can have a significant effect on your business.
Starting up a businesses or running a small to medium business can appear fraught with difficulty. While it is clear there are obstacles these can all be dealt with as long as the business takes the appropriate advice. This leaves you to focus your mind on the real reason you started a business – making a success of your business venture.
How Parslows can help
We understand that each business is different and requires a unique approach. Here at Parslows, we tailor our legal services to suit your individual needs, providing you with exceptional results at all times
Our clients are pleased with our service and fees, we are confident you will too.
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The information and opinion expressed in this briefing does not purport to be definitive or comprehensive and are not intended to provide professional advice. For specific advice, please contact Parslows, We are not responsible for, and do not accept any responsibility or liability in connection with, the content of this document or any reliance upon it