As the pandemic showed, in both life and business, you ought to expect the unexpected. Despite all your valiant efforts, nothing can completely get rid of all the risks involved in running a small business, pandemic-induced or otherwise.
Thankfully, though, you can get pretty close. All this requires is a concrete plan and a commitment to your risk management strategy, for protecting your business’s finances. As such, we’ve narrowed down the key parts of any business plan to protect your company come rain, shine, incident or accident.
- Obtain insurance
Let’s face it, the idea of getting sued is a gut punch and it’s not something businesses like to plan for. It can also lead to significant losses if you’re on the wrong side of a lawsuit. However, insurance policies can protect you from this outcome, as these ensure your provider and not you have to pay out for compensation costs, as well as things like legal fees and any other losses sustained.
Yet, despite this, the only type of business insurance that is compulsory under UK law is employers’ liability cover, applying to most firms that employ staff. It is nevertheless common for regulators to require business to possess specific covers in order to operate, making them de facto mandatory.
Which policies do I need?
Public liability insurance protects you in the scenario that a member of the public suffers injury or incurs property damage during the course of your business operation. This is not legally mandated, but highly desirable across many industries. As Tradesman Saver reminds us: “accidents are always possible if your business involves direct contact with others, especially if your work is often carried out on client sites, or you frequently welcome visitors to your premises. Therefore, it’s vital to be prepared for the worst by protecting your business financially.”
Professional indemnity insurance, on the other hand, is a must have for accountancy and legal professionals, along with some in the healthcare sector. This covers you if a client claims they have received sub-optimal service from you, like a breach of copyright or loss of documents. Any organisations that give professional service or advice (and that’s quite a few) are vulnerable to claims of this sort.
- Establish client and employment agreements
Pay attention to detail
When drawing up contracts, having clearly documented requirements and obligations ensures that everyone’s expectations are laid out in black and white. Small businesses will most commonly need to draw up a bill of sale, and an express agreement in order to clearly outline the extent of their liabilities. These forms of agreement provide full transparency regarding obligations, costs and fees, enhancing open and clear communication. Most pertinently, they help to protect your business’s finances by reducing the possibility of any unexpected costs.
For what may seem like trifling details, such as correctly identifying each party, are actually absolutely essential to defining their individual responsibilities. Clearly outline when and under what conditions any payments are to be made, such as instalments or upon the completion of work to an acceptable standard. Otherwise, what you might think is to your satisfaction turns out to be dependent on a subjective standpoint.
Include terminations and dispute T&Cs
It is also vital to define the terms and conditions in which either party can terminate the contract. Legal advisors NOLO point out that “if one party misses too many important deadlines, the other party should have the right to terminate the contract without being on the hook legally for breaching the agreement”.
In the same vein, outline in the contract what will happen when things go awry, and a dispute takes place. How will each party resolve the issue? For example, stating in unambiguous terms that a dispute will be managed through arbitration or mediation — rather than a courtroom, for instance — can save you time, stress and, most importantly, money.
- Secure your IP rights
This tool might be the most recognisable type of protection around, though many aren’t entirely sure how important it is. Let’s just say, ever since Florentian cathedral architects were granted patents (i.e. the rights to stop their competitors from copying their ideas), intellectual property (IP) has become an important staple of commerce.
Thomas Edison was ruthless about protecting his inventions from being stolen, and IP rights are the reason why you see the little trademark on every McDonalds logo. If your business is worth its salt, nothing you make will be able to be copied or imitated in a way that allows others to piggyback on your work and successes.
Bgateway has an extensive explainer on what forms of IP rights you ought to secure. Some, for instance, will be created automatically, such as copyright. Businesses should also remember to conduct regular IP audits to manage their intellectual property, and keep records of the licensing and transfer of IP rights through the Intellectual Property Office (IPO) register.
Author Bio: Syna Smith is a Seo Specialist at backlinksmedia.com. She is able to easily rank her client’s website. She is the Head of SEO Top SEO Agency She has experience of 8 years in the digital marketing field. She is a dynamic and problem-solving personality and is also an expert in blog outreach. Many companies are satisfied working with backlinksmedia.com.