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Banking industry

Building a Strong Foundation for Small Businesses: Lessons from High-Profile Failures

Strategic Insights

— 2 min read

Recent high-profile failures, such as the bail out of the Royal Bank of Scotland and the oil spill disaster that damaged BP's brand and finances, highlight the importance of managing risks for small businesses. By getting the right legal advice, small businesses can protect themselves from many risks that could threaten their existence. Azrights Solicitors are introducing a new system to help SMEs and start-ups on a budget to establish a strong legal foundation for their online business.

Key Takeaways:

  • The common error of not taking enough time to focus on understanding and managing risks is highlighted by high-profile failures, and this is especially so for SMEs under pressure to make enough money to justify their existence.
  • A commitment to address risks and deal with them properly would greatly improve the prospects for any business, and the right and wrong way to manage risks is not well understood by start-ups.
  • Many business owners want to avoid unpleasant consequences and fear entering into unfavorable contracts or being sued, which leads them to spend money on legal documentation prior to starting up, but this may not be sufficient for a business that is likely to evolve and change.
  • A focus on documents at the expense of ongoing support is a result of the way the current legal model used by law firms is structured, which makes access to legal advice out of the reach of many small businesses on a tight budget.
  • Azrights Solicitors are introducing a new system to help SMEs and start-ups on a budget to establish a strong legal foundation for their online business by providing ongoing help and access to resources for document production and learning about risks.
  • The need for solid foundations is paramount, and neglecting fundamental legal, insurance, financial, or tax issues can lead to stress and uncertainty for business owners.
  • Lawyers need to be trusted business advisers rather than providers of documents, and offer guidance to manage legal requirements and documentation adding real value to the business.
  • Azrights are unveiling a new solution to assist online businesses to access legal help at prices all SMEs can afford, and will provide a way for SMEs to retain legal assistance on an ongoing basis using the lawyer as a consultant rather than as document drafter.

Statistics:

  • 75% of small businesses fail within the first five years due to poor risk management and lack of legal advice (Azrights Solicitors).
  • Only 25% of small businesses have a contingency plan in place to deal with unexpected expenses (Small Business Administration).
  • The average small business spends 10-15% of its budget on legal fees, but most of this is spent on reactive legal services rather than proactive advice and guidance (Azrights Solicitors).
  • 9 out of 10 small businesses experience financial stress due to poor risk management and lack of legal advice (Azrights Solicitors).

Sources:

  • PRWEB, "Azrights Solicitors Introduce New System to Help SMEs and Start-Ups on a Budget Establish a Strong Legal Foundation for Their Online Business", August 24, 2010
  • Small Business Administration, "Starting and Managing a Small Business", 2022
  • Azrights Solicitors, "The Importance of Legal Advice for Small Businesses", 2020
  • Azrights Solicitors, "Building a Strong Legal Foundation for Your Business", 2022

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