How start-up businesses help boost the Jersey economy
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 and Jersey start-ups are great for the economy.
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 business 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 them 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 are 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. Jersey Business Legal Services at Parslows Jersey and its associates can provide tailored solutions at cost effective rates for Jersey 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 Jersey Business legal advice services, cannot provide you with advice as to the viability of a business idea, what we can do is provide you with the foundation blocks in relation to legal and regulatory issues.
Your business legal structure
One important decision is your business legal structure. 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 shareholders 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 shareholders agreement 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 with Jersey start-ups 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 Jersey start-ups or small to medium-sized businesses 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 staff, 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-sized 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 business or running a small to medium-sized 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.