WHAT’S IN A NAME?

Your business’s name and the image it projects are important. The few words used in the name will speak volumes: is it traditional, contemporary, clever, straightforward, exclusive, to-the-point, abstract, memorable, recognisable?

When you build an image you usually only have one chance to get it right because images tend to stick. Remember the jewellery chain Ratner, forever associated with the word ‘crap’ after a famous speech by its own boss? Or Marks and Spencer, which shows, for different reasons, how powerful a lasting image or branding can be. Despite its well-publicised ups and downs in the last few years, it’s still on the whole known for quality and reliability.

There are a few occasions when your business doesn’t need a name or strong branding, perhaps because you’re planning a low key business where you have enough captive customers lined up and are unlikely to need anymore. This could be if you’re providing a gardening or child care service just for the families who live in your hamlet, or when you know that all the bread and cakes you can make will be sold through one or two local bakeries. In these circumstances a name, image and snazzy logo could even be counter-productive, seen as too slick and a waste of money.

But for most businesses, the name, image and branding that goes with it make up one of the key steps to success, so it’s worth spending some time thinking about it.

THINKING UP YOUR NAME

You could decide on a name that identifies with your local area. This can work well, whether you’re selling locally or further afield, something like Devon Creamy Yoghurts or Cumbrian Woodcrafts. Or consider an abstract name, something that conveys a business philosophy, a bright new beginning, a way of life. The Post Office famously changed its name to Consignia but it was greeted with widespread ridicule and was eventually dropped. The old British Steel became Corus after a merger, but that name stuck. Names like these don’t actually mean anything, but the branding people who dreamt them up must have decided they conveyed the right corporate image.

Thinking up names is a knack and it’s something you either have or you haven’t. It’s not something you learn. If you’re stuck, find a friend or family member who’s good at competition slogans and get them to have a go. And if that still doesn’t produce anything then name the business after yourself. Plenty of others do.

When you’ve decided on your name:

• Make sure no one else is using the name already. It’s important that you don’t infringe their copyright or trademark if they’ve registered the name. Check with Companies House (www.companieshouse.gov.uk).
• Then check the internet and your local phone book. If someone nearby is already trading under that name then think up another. If they’re 300 miles away then it’s less of a problem. What is important is that the customer can distinguish between you, and that you can’t be accused of plagiarising the name of the other business, masquerading as them or trying to poach their trade.
• Check to make sure the name is available as a website address. Do a Google search on ‘domain names’ to find someone to register it for you. (See Chapter 11 on setting up your own website.)

Other points to bear in mind:

• You can’t use offensive names.
• The name of a limited company or limited liability partnership must be registered at Companies House.
• It can’t be the same as another registered at Companies House.
• There are restrictions on using words like ‘Royal’.

HOW TO FORMALLY SET UP THE BUSINESS

This will vary dramatically, depending on what it is you’re going to do.

If you’re setting up as an odd job person, and plan to spend your time mowing lawns, painting windows and fixing leaking taps, then you’ll need to do very little. If, on the other hand, you’ll be:

• going into partnership
• setting yourself up as a limited company
• employing people
• taking on a franchise
• taking on premises
• doing anything involving health and safety
• doing anything involving children
• doing anything involving food and drink
• doing anything which may have an environmental impact

… then you’ll be filling out a lot of forms.

Sole trading

By far the quickest and easiest way to get started is as a sole trader. You wake up one morning and decide to start selling cut flowers from the bottom of your garden. That’s it: you’re now a sole trader.

The key points here are that:

• Sole traders are personally responsible for any losses the business makes.
• If you can’t pay your debts, your own possessions and home could be at risk.

• You should keep a proper record of your business’s income and expenditure.
• Even if you’re a sole trader, you can still employ people.

You need to tell the Inland Revenue which will send you a couple of simple forms to complete, confirming when you started trading. It’ll then use the information you’ve provided to calculate your National Insurance contributions. Otherwise, the only other real thing to do is to make sure you fill out an annual tax return which the Inland Revenue will now begin sending you.

It may be tempting to start trading without telling anyone at all and work only for cash. Remember though that the Revenue runs a national team of determined and dogged staff and it also receives regular tip-offs from the public, so it’ll probably catch up with you in the end.

Partnership

Going into business with a partner or partners means you’ll probably have more money to invest in the business. You share the risk and hard work of decision making but you also share any profits.

The key points here include:

• The partners share personal responsibility for any business debts.
• If one partner can’t pay their share of the debt then the other partner becomes responsible for it.
• A partner can make decisions and enter into contracts without necessarily telling the other partner unless you write something into the partnership agreement to stop this.

• Once again, the Inland Revenue has to be told when trading begins.

You need a formal agreement drawn up which spells out exactly what your business’s aims and objectives are. This is not the place to scrimp on money: get a solicitor who you all agree on to draw up the contract.

The world is littered with the broken friendships of people who’d gone into business together. Think very long and hard, and then think even more, if you’re considering going into business with a friend. Are you prepared to risk your relationship in the pursuit of grubby profit?

Limited liability partnership

In trading terms, this is basically the same as an ordinary partnership except that your liability is limited to however much money you invest in the business. It means that if anything goes badly wrong your personal possessions and home should be safe, unless of course you used them as collateral for a loan.

But setting up this partnership is more complicated and it involves first registering and then submitting accounts to Companies House, which makes the accounts public. The partnership may also have to be audited. If you’re considering this then you need to speak to a solicitor and accountant.

Limited company

You don’t have to be a big firm employing hundreds to become a limited company. There’s limited liability here in the same way as there is for the limited liability partnership. But limited company status is thought to convey extra gravitas, an instant sense of size, stability and permanence. It may also make it easier for the business to borrow money, and the title probably looks better on letterheads.

• Anyone can set themselves up as a limited company.
• The company has to be formally set up and registered.
• Its annual accounts must be sent to both the Inland Revenue and Companies House, where again they can be made public and anyone can read about how well or badly you’re doing.
• You can raise money for the business by selling shares in it to other businesses or individuals.
• You have legal responsibilities.
• If the company fails and you haven’t carried out your duties as a company director you could be liable for the debts, disqualified from acting as a director, and even sent to prison in extreme cases.

FRANCHISES

Some of the biggest names on the high street are franchises.

Essentially you pay for a licence from a company which allows you to use its name and sell its products. You have a head start because you’re selling an already established product or service, plus you usually receive support and advice from the parent. You buy the franchise and the bigger the name, the higher the price generally. So you have to decide whether the benefits will outweigh the cost.

Only buy a franchise from a business with a good track record. Franchise contracts are usually detailed so get legal advice before you sign anything. There is a British Franchise Association – tel: 01491 578050 or website: www.british-franchise.org

SOCIAL ENTERPRISES

Not everyone is driven by hard cash. You may decide you want to set up something to benefit the community, for example a bus link with the local town or a loose co-operative of local vegetable growers. These are known as social enterprises when the primary aim is to benefit the community rather than make a profit, with any surplus money being reinvested back into the business. The government is encouraging them because it believes they drive up productivity and competitiveness, help deliver more public services and result in a more inclusive society.

At the time of writing, a social enterprise still has to be structured along standard company lines, and you need to talk to a business adviser or your accountant about your best options if you are thinking about setting one up. There are plans to introduce a category called a Community Interest Company or CIC from July 2005, though this may date may slip. According to the DTI’s website: ‘CICs will be a new type of company … easy to set up, with all the flexibility and certainty of the company form, but with some special features to ensure they are working for the benefit of the community’.

For more information go to:www.dti.gov.uk/cics/.

RULES AND REGULATIONS

While you’re thinking about the legalities of setting up your business there are a couple of other things to take into account at the planning stage.

Health and safety

This is something you have to take seriously. As the owner of a business you have a duty of care to any employees, outside contractors, visitors or members of the public who may be affected by your work. You can be prosecuted for failing in that duty and in extreme cases can be sent to prison. You need to know how and when to carry out risk assessments. If you’re working in an area where health and safety is likely to be a big issue consider going on a course or employ a health and safety consultant. Depending on the nature of your business you may have to register with the Health and Safety Executive. Check the HSE website: www.hse.gov.uk or call its help line 08701 545500.

Disability access

If you’re planning to open a shop, studio, workshop or other premises where members of the public may go, you need to think at the planning stage about disability access. You have to make sure disabled people can access the goods and services your business offers. You mustn’t discriminate against them or any disabled employee. You need to make ‘reasonable adjustments’ if necessary. For example, you may have to provide a ramp to allow wheelchair access up steps to your shop, or allow guide dogs into your shop when usually dogs would be banned. In practice the ‘adjustments’ are what most humane people would do anyway.