Does better legal cover save your startup money?

Startup Direct are excited to announce that our partner, Lawbite, are running a legal masterclass for our startup entrepreneurs on April 25th at WeWork Chancery Lane. To find out more information and sign up for the session here!

In advance of the session, Lawbite have provided us with access to their recent YouGov survey which startup_loan_lawbitefeatures interesting facts and figures on the use of legal services in business.

At the start of 2016 the Department for Business Innovation and Skills reported that 99.9% of all private sector businesses were small or medium-sized (SMEs) and that these businesses provide employment to 15.7 million people. Arguably these businesses are the lifeblood of the UK economy.

With this in mind the phrase “prevention is better than cure” has never been truer when you look at the financial impact of neglecting the legalities of operating a small to medium-sized business in the UK.  There is reluctance by the UK’s Small and Medium Enterprises (SMEs) to use lawyers to take care of their legal business, which can result in significant financial loss.  Interestingly these legal costs can often be avoided which is particularly important for smaller businesses where minimising all costs is so crucial to staying in the black.

YouGov has conducted a unique, comprehensive and independent survey of UK Small Medium Enterprises to discover the financial impact when they fail to take proper care of the legal issues they face. The economic analysis of the YouGov results was carried out by the Centre for Economics and Business Research (Cebr). There is an important message here for every business owner so we wanted to share the survey highlights with you. The results are startling with an upper estimate indicating that SMEs are losing more than £13.6 billion a year by failing to take care of their legal issues.

What are the potential risks to your business?

The survey has provided some results that should make every business sit up and take notice. It’s difficult to imagine what impact the loss of £13.6 billion might have on the SME economy so it’s easier to break the figures down into real-world terms and look at the risks every business faces.

Firstly, results show that the average SME in the UK is likely to encounter more than 8 legal issues a year.  Secondly of the legal issues SME respondents experienced, 43% resulted in costs of £5,000 or more. With the highest annual loss found in the Business Administration and Support Services (£44,958), Food and Beverage (£36,011) Publishing, Broadcasting and Media (£17,499), Finance and Insurance (£15,976), Construction (£13,028) and Charity/Voluntary (£12,601) sectors.

More than half of all issues were found to be in five key areas:

  • Disputes (13.2%)
  • Employees and Key Contractors (12.5%)
  • Customers and Suppliers (11.4%)
  • Terms and Conditions (9.2%)
  • Software (9.1%)
  • Other (44.6%)

 

Startup Direct offers funding and startup business loans as well as mentoring and support including legal support with partner Lawbite. To find out more, come along to our Lawbite free legal masterclass, click here for more details.

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