“Three Ways To Secure Your Business Against Disruption”

“Three Ways To Secure Your Business Against Disruption”

Friday, July 19, 2019

Adam Convisser, Corporate & Commercial Partner

The word disruption is constantly used in business today, and for good reason.  As little as a year ago, few would have predicted that Facebook would launch its own currency; across Europe, political instability is becoming more prominent, especially in Austria, Hungary, and Poland; and America and China continue to circle each other, dancing around the worrisome prospect of a full-blown trade war (however this may have calmed down for now if recent news stories are to be taken on face value).

These observations can be made without even mentioning the dreaded ‘B’ word.

In late 2018 there was much talk of a 2020 global recession; however, fears have abated.  But if the past three years has taught us anything, it is that any small business must have strong contingency plans in place in order to survive and perhaps even thrive during unforeseen events or events beyond their control.

Here are our three top tips for ensuring your organisation can cope with adverse situations calmly and proactively.

One – make sure your commercial contracts are regularly reviewed, updated, and protect your interests

Every business should annually review their commercial contracts to ensure they comply with any changes in the law.  For example, all organisations which deal with personal data need to check that their contracts comply both with the GDPR but also the Data Protection Act 2018.  Particular attention needed to be paid to art. 28 of the GDPR, which states a controller must have a legal contract with a processor which governs the processing of all personal data collected and stored by the controller.  The contract must set out “the subject-matter and duration of the processing, the nature and purpose of the processing, the type of personal data and categories of data subjects and the obligations and rights of the controller”.

When it comes to consumer contracts and service agreements, businesses cannot normally contract out of the protections provided by consumer legislation such as The Consumer Rights Act 2015 and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.  However, your agreements should stipulate clear expectations surrounding the capabilities and performance of your product/service.  Also, contracts allow you to set out how and when the product or service will be delivered, how and when payment is to be made, whether a deposit is required, any warranties or indemnities, and how disputes and breaches will be dealt with.

If a major economic or political change is looming, it is well worth investing in a commercial solicitor checking over your commercial contracts, including service agreements and distribution agreements to ensure they will continue to protect your interests if the change comes into play.

Two – check your insurance covers your risk

Many flourishing businesses have become insolvent following a flood, fire, or similar disaster.  The reason is not the event itself, but that the insurance failed to respond.

For many, the knowledge that their insurance coverage is not fit for purpose only comes to light after a claim is made.  Examples of reasons why this might be the case include:

  • Full and frank disclosure was not made to the insurer by the insured
  • The amount of stock held increased, and no one told the insurer
  • No proof exists of the amount of stock lost
  • The value of the stock/equipment exceeded the policy cover

It is crucial to check your insurance cover frequently to ensure it fits the position and value of your current business, not simply the position it was in when you took out the policy.  Insurance disputes are costly; therefore, it is best to avoid the risk of such an occurrence developing by having your policy reviewed regularly.

Three – Secure the residency of any EU national employees

The average cost of replacing an employee is a whopping £30,614, as new recruits take up to eight months to reach optimum productivity levels.  Once The United Kingdom leaves the European Union (EU), freedom of movement is very likely to end.  To protect your talent, ensure your EU national employees have applied for Settled or Pre-Settled Status, depending on which requirements they meet.

In summary

These three suggestions are some of the many ways a prudent business can secure its interests against the vicissitudes of commercial life.  It is essential to ensure you have a robust set of terms and conditions, applicable partnership/shareholder/joint venture agreements in place, and well-drafted employment contracts and HR systems.

Not only will having these policies and procedures in place protect your organisation in times of change, but it will also give potential investors the confidence that your business is well-run and capable of delivering projected turnover and profits.

If you would like to discuss any legal matters relating to your business, please contact Adam Convisser, a Partner in our Corporate & Commercial Team.


Please note – this article does not constitute legal advice.