Mind your own business

Setting up a consultancy in difficult economic conditions can be a daunting prospect. We attempt to make the process easier for you with some helpful advice from those already in the know. Research by Richard Clayton

How to set up a company

Success, in the design marketplace, is being achieved by those who can distinguish themselves. It also takes hard work, focus and dedication.

It’s vital when starting a business to have a plan that provides a blueprint for the business going forward. The business plan should cover the three ‘Ms’:

market position;

manpower;

money.

Market position will look at your offer, how it compares with the competition and, most importantly, why it will succeed.

Manpower covers the start-up team, their roles within the business and how their previous experience equips them to perform those roles. This should also consider future staffing requirements.

Money, obviously, is concerned with the cash requirements and how you will be funded. It should cover the pricing structure and how this interacts with the market position. A key part of this section is financial forecasts.

Make sure you also consider the ‘what ifs’ so that you can cater for all probable outcomes.

There are a number of steps that need to be implemented:

  • establish a company/business partnership;
  • decide on the name and register it;
  • set-up payroll tax and VAT registrations;
  • put in place business and personnel insurances;
  • consider a shareholders’ agreement;
  • issue employment contracts;
  • draft client contracts that protect intellectual property;
  • source IT and accounting support

Amanda Merron is a partner at accountant Willott Kingston Smith

Helpful advice

  • Banks provide about 75 per cent of new businesses with loans. The Small Firms Loan Guarantee Scheme (see www.sbs.gov.uk) is for those who have a viable business plan, but are struggling to secure finance from banks.
  • Grants may be available from your local authority, enterprise agency, regional development agency, chambers of commerce or learning and skills council, through Business Link (www.businesslink.org). Scotland is served by the Small Business Gateway (www.sbgate way.com) and Highland & Island Enterprise (www.hie.co.uk). The Welsh Development Agency National Gateway can assist business start-ups in Wales (www.wda.co.uk) and the equivalent for Northern Ireland is Invest Northern Ireland (www.investni.com).
  • Various organisations provide grants, such as The Prince’s Trust (www.princes-trust.org.uk) and Prince’s Scottish Youth Business Trust (www.psybt.org.uk), but they usually have eligibility criteria attached. And anyone aged between 16 and 30 can contact Shell LiveWire for advice – £200 000 is given out via its awards scheme each year (www.shell-livewire.org)
  • The Smart Award formally closes on 31 August to be replaced by the Grant for Research and Development, a Department of Trade and Industry initiative that provides grants to help individuals and SMEs to research and develop technologically innovative products and processes (contact Business Link).
  • Venture capital firms buy a portion of your share capital or equity in return for a major investment in the business. Contact the British Venture Capital Association at www.bvca.co.uk.
  • The Design Business Association has more detailed research available in PDF format. Contact ben.fox@dba.org.uk.

Deborah Dawton is chief executive of the Design Business Association

Copyright issues

In the design industry there are important issues relating to intellectual property rights that must be considered when you are starting up a business. Here are a few guidelines on some of the first steps to take:

  • Protect your ideas. Pure ideas can be difficult to protect unless they are patentable inventions. Put in place confidentiality agreements to ensure that your ideas are not used by others.
  • Protect your designs. Sign, date and keep all design drawings, including any initial sketches that you create.
  • Ensure that you have independent evidence of the date of creation for all of your designs. For example, send your designs to yourself in a registered delivery envelope or join Anti Copying In Design, better known as Acid, and register your designs on Acid’s Design Register.
  • Conduct business with others on your own standard terms and conditions. These should be drafted to ensure you retain the ownership of all the legal rights in your designs. For bigger projects, draw up a specific contract to minimise the likelihood of dispute.
  • Make sure you register your business name as a trademark.
  • To deter copyists, consider including the appropriate ‘copyright’ notice on your products, website and marketing material, such as:
  • ‘ [consultancy name] [year(s) of design]
  • Design Right [your consultancy name] [year(s) of design].

All copyright, design rights and any other intellectual property rights existing in our designs and products and in the images, text and design of this [website/marketing material] are and will remain the property of [your consultancy name]. Any infringement of these rights will be pursued vigorously.’

As a member of Acid, you can use the Acid logo on all your design work and packaging as a deterrent.

  • Include in your design an insignificant detail that serves no apparent purpose. Copyists often reproduce an entire design, including these details, which provide excellent evidence of copying.
  • Protect yourself as well as your designs. Consider setting up in business as a limited company, rather than as a sole trader or a partnership. This should ensure that if you run into any financial problems, your own personal assets are not at risk.

Simon Clark is a partner at Addleshaw Goddard, the UK associate lawyer for Acid. Acid can be contacted on 01531 650476

Property

Like any house buyer, designers looking to acquire property – either outright or, more usually, on a rented basis – need to watch the property market like hawks. Which areas are up, which are down? Who’s moving in where and who’s moving out?

In London, rental values in traditionally prestigious locations have fallen by nearly 25 per cent since their summer 2000 peak. The most you can expect to pay in prime Soho is £35 per square foot – which is not to be sniffed at, particularly if you can also secure a significant ‘rent free’ period.

For design groups starting out, there’s a wealth of reasonably priced purpose-built developments available in Shoreditch (average rent £10-15 per sq ft) and Clerkenwell (£20-25). Moving further afield, similar properties in Holloway (£12) and Shepherd’s Bush (£19.50) look good value. South of river, you should find Shoreditch prices in Borough and Waterloo.

The advantages of tenancy in such a building are obvious: landlords in sympathy with your culture and quality environments offering the volume and light you need for a busy studio.

As with residential property, it’s better to own your own home than pay rent. The partners or directors may wish to consider buying a property themselves and leasing it back to their business. That buys security and a potential pension pot. Make sure you lock into the longest and lowest interest rates.

If you do rent, don’t commit to a lease longer than five years. Flexibility is vital. Having an option to break after three years is also a wise move, especially with smaller spaces. For a group of tyros just out of college, the best bet is probably the Tea Building, off Commercial Road in Shoreditch, at £12.50 per sq ft.

Unquestionably, there are some good deals about. The best time to start a business is during tough times – when the cycle picks up, you’re on the up.

David Rosen and David Jackson are partners at property consultant Pilcher Hershman

Further reading: How to Market Design Consultancy Services by Shan Preddy – published by Gower, priced £31.50

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