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Setting up a business involves complying with a range of legal requirements. Find out which ones apply to you and your new enterprise.

What particular regulations do specific types of business (such as a hotel, or a printer, or a taxi firm) need to follow? We explain some of the key legal issues to consider for 200 types of business.

While poor governance can bring serious legal consequences, the law can also protect business owners and managers and help to prevent conflict.

Whether you want to raise finance, join forces with someone else, buy or sell a business, it pays to be aware of the legal implications.

From pay, hours and time off to discipline, grievance and hiring and firing employees, find out about your legal responsibilities as an employer.

Marketing matters. Marketing drives sales for businesses of all sizes by ensuring that customers think of their brand when they want to buy.

Commercial disputes can prove time-consuming, stressful and expensive, but having robust legal agreements can help to prevent them from occurring.

Whether your business owns or rents premises, your legal liabilities can be substantial. Commercial property law is complex, but you can avoid common pitfalls.

With information and sound advice, living up to your legal responsibilities to safeguard your employees, customers and visitors need not be difficult or costly.

As information technology continues to evolve, legislation must also change. It affects everything from data protection and online selling to internet policies for employees.

Intellectual property (IP) isn't solely relevant to larger businesses or those involved in developing innovative new products: all products have IP.

Knowing how and when you plan to sell or relinquish control of your business can help you to make better decisions and achieve the best possible outcome.

From bereavement, wills, inheritance, separation and divorce to selling a house, personal injury and traffic offences, learn more about your personal legal rights.

What is my business worth?

Establishing the sale value of your business can be difficult. While well-known valuation methods can give you a rough idea, ultimately your business is only worth what someone is prepared to pay for it. The right approach to negotiating a sale can have a big effect

Valuation methods

There are several standard techniques that can be used to provide a benchmark valuation for your business:

  • price/earnings - based on multiplying your profits by an appropriate ratio (the price/earnings ratio)
  • asset valuation - based on the assets your business holds
  • entry valuation - based on the cost of starting a similar business from scratch
  • discounted cash flow - based on likely future cash flow
  • industry rule of thumb - if your particular sector has its own established valuation formula

Using two or more different valuation methods can help you come up with a range of valuations for your business.

These valuations, and the amount a purchaser is in fact likely to be prepared to pay, may be substantially lower than the value you place on your business.

Factors influencing value

The value of your particular business is likely to be affected by several factors:

  • Growth prospects - the better your growth prospects, the more your business is worth.
  • Risk - the smaller the business, the higher the risks tend to be and the less a purchaser will pay. Small, owner-managed businesses are particularly risky for a new owner to take over.
  • Special features - skilled employees, intellectual property or other special strengths of your business will increase its value.
  • Opportunities - your business will be worth more to a purchaser who can increase profits (for example by cutting costs, or selling your product to their existing customers).
  • Cost of financing - a purchaser is likely to pay less if their cost of financing the purchase is high.
  • Supply and demand - your business may be worth more if it is unique, or if there are several buyers looking to purchase that kind of business.

Achieving a high sales value

Do what you can to make your business as valuable as possible.

Plan ahead

The more time you have, the easier it will be to show your business in the best possible light. Concentrate on boosting short-term results to get the best possible profit record before you offer your business.

Think about timing

If possible, put your business up for sale when business conditions are good, and when business valuations are high. You’ll also be in a stronger negotiating position if you aren’t under pressure to sell immediately.

Reduce business risk

If you are over-dependent on a few customers, try to diversify your customer base. If one or two employees are crucial to the success of your business, consider ways to tie them in. If trade marks or other intellectual property are important to your business, make sure they are properly protected.

Sort out systems

Strong management information systems give the purchaser confidence that there won’t be any unpleasant surprises.

Stimulate competition

Market your business to attract potential purchasers. The price will be higher if there are competing purchasers.

Structure the deal

A structured deal may increase the price the purchaser is willing to pay. For example, you might commit to continuing to manage the business for a year or two, or link the price to future earnings - reducing the purchaser’s risk. Being willing to defer part of the purchase payment may also encourage purchasers.

Plan for tax

Making sure the deal is tax-effective for you can have a dramatic impact on the net value you receive.

Your legal adviser can offer specialist knowledge and negotiating skills to help you.

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