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Navigating Start-ups Through a Pandemic and Recession

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Written by:

Theresa Grech

Partner, Head of Corporate

Ince (Cardiff)


An entrepreneur wanting to go it alone and set up their own company would find it challenging at the best of times.

Therefore, starting a business during a pandemic and a recession is not for the faint-hearted.

Start-ups and small-to-medium enterprises (SMEs) play a vital role in the UK business population. The number of private sector businesses in the UK at the start of 2020 was 6 million; with 5.94 million being small businesses with 0-49 employees. In effect, SMEs account for three fifths of the employment and around half of the turnover in the UK private sector (BEIS statistics: 8 October 2020).

Although the number of company registrations generally tends to fall during a recession, a number of successful companies such as General Motors, Burger King, CNN and more recently Uber and Airbnb started their enterprises during a recession. In fact, evidence shows that new businesses can flourish – whatever the date of their incorporation.

Demand for innovation of certain products and services as a result of the pandemic, such as new medical equipment, medical supplies or contract tracing; or innovation relating to the innate changes in our daily lives such as remote working, e-commerce, home deliveries and online education will be in much higher demand. This undoubtedly means that even during a time of crisis, new businesses will need to be created to support this demand.

We understand that when a business is setting up, costs are tight; but asking for advice, whether it be from lawyers, accountants or tax advisers at the outset should help navigate some potential pitfalls.

What are some of the key things to consider when starting up a business?:

  • Decide the format for the start–up business – and whether it will be a sole trader, partnership, LLP or private limited company. Each type of business structure has different rules, so it is important to get advice at an early stage.
  • If you are starting your business with other people, it is advisable to have an agreement regulating the relationship between the founders of the business from the outset – whether it be a Partnership Agreement, LLP Agreement or Shareholders’ Agreement. This Founders’ Agreement will deal with the rules and responsibilities of the Founders, along with other details such as non-compete restrictions between the Founders or arrangements in the event of a disagreement.  Such agreements will ensure that the business has clarity in management structure from the start.
  • Enter into contracts with people who are working for the business – a failure to have clear employment terms can be a minefield in the long run. An important aspect of starting a business is to understand your responsibilities as an employer (if relevant).
  • Enter into contract terms with your suppliers and customers – being clear on the terms upon which you trade is vital and will avoid disputes.
  • Protect any innovative ideas/intellectual property you may have from the outset – registration of trade marks and patents can be quite complex so advice should be sought at the start of your business. For more information on how to protect your intellectual property, please read our article.

Advisers will therefore be able to ensure that:

  • The business structure reduces any exposure to personal liability;
  • The business is set up in a tax efficient manner;
  • The business enters into contracts with third parties on favourable terms;
  • The business enters into appropriate contracts with its employees and understands its role as an employer; and
  • The business protects its intellectual property rights both on creation and disclosure.

Failure to do so could be costly to a start-up business.

In an aid to help new businesses in these uncertain times, we have prepared a free start-up pack which contains some useful guidance. The purpose of these information sheets is to highlight what actions to undertake and key issues to consider – so that your new business has the correct legal framework and protection from the outset. This will ensure that your start-up business has every chance of success.

To download our start-up pack, please click here to enter your details.


The information above is not and should not be taken to be legal advice. You should not take action or omit to take action based on this information.

If you require any help on the issues raised above, our colleagues would be delighted to help you with any queries:

If you would like any advice on your start-up business, please contact Theresa Grech on [email protected]; or

If you would like us to set up a company for you, please contact Mel Kincaid on [email protected].