Key to the success of any business is keeping accurate and up to date business documents. They steer the future course of your business, and a record of its past in case of review or audit. It’s especially important for small businesses to be aware of the important documents they need to keep and develop, as they don’t have larger business’ infrastructure to keep them backed up or their momentum to keep them going if their business plan is out of date.
With that in kind here are some key business documents for smaller business owners to bear in mind.
A business plan is the foundation and blueprint of your business. A business plan is a key document you will need to show to investors and banks to secure funding, because it lays out exactly what they are investing their money in and lets you show them you are conscientious, intelligent and showing them a well researched proposal.
Referring to your plan as you grow, and setting new goals and milestones help keep your business on track and your development in control to stop you overextending yourself and risking the collapse of your business.
Articles of Association
If you are setting up a limited company, rather than operating as a sole trader, you will need Articles of Association. This document lays out how your company is run – the rules you will operate under, and who holds authority and responsibility in various situations. It’s important to compose these carefully, not only so your business is compliant with the law but also so everyone knows the limits and bounds of their business relationships: if you are in business with partner, your Articles of Association allow you to define when you can and can’t override them, and who might have the final say in a disagreement.
This is very similar to your Articles of Association, but governing your relationship with your shareholders. It lays down in a legal document exactly what their authority is over the company, and what your authority is over them.
It can be a sensitive matter to ask your shareholders to sign this document, as for a small business, particularly in its early days, your shareholders are likely to be family and friends. It is possible even for close relationships to become difficult when money is involved and it’s very wise to have legal wording to fall back on.