How to Combat the Biggest Risks for Your Small Business


How to Combat the Biggest Risks for Your Small Business on

Three essentials needed to minimize damage

Traditionally, January means resolutions and fresh starts. It’s the New-Year-New-Me Syndrome—and most of the time, promises to self often fall apart within the first few weeks. For business owners, though, the beginning of a new year is a chance to either start a new venture or to re-evaluate a current one.

All businesses have varying degrees of risks, but the small ones, perhaps because of lack of business knowledge or a desire to keep costs low at the outset, often seem to be swimming with them. Fortunately, many of these risks are preventable. All it takes is a little bit of thought and planning.

Insurance tops any list of must-haves

Naturally, proper business insurance and coverage is a necessity in today’s business world. At the very least, small business owners should invest in a general liability policy to protect owners from lawsuits involving employee conduct, product safety, and other general areas of liability.

Of course, there are additional coverages that may be important, depending on the business and specific risks. Additional policies include:

• Business Owner’s Policy (BOP): a much more comprehensive insurance that includes liability and business interruption.

• Key Person Insurance: protects owners and the business, should a key player leave the company or is no longer able to do his or her duties.

• Life Insurance: necessary if the business is illiquid and the owner’s family is dependent on income generated by the business.

Premiums will increase depending on the scope of the coverage. An investment at this stage, however, will offset greater costs later on.

Create contracts that work to protect you

The cornerstone of many business ventures is the contract. As a result, they must be solid and smart or else the foundation of the business will crumble. Just as with insurance, making an investment in proper legal advice at the start will offset problems later on.

When developing contracts, it’s important to consider two key factors:

• Contractual Indemnification Clauses: designed to protect you from damages caused by other businesses and/or people on which your business relies.

• A contract should also consider what happens if things sour, particularly with a partner or associate. While all parties are riding a wave of excitement at the start of a business, there needs to be a procedure to cut your losses if things don’t go as planned.

The art of procedures and record keeping

Risk is very often controlled through the use of systems, procedures, and record keeping. An established standard will ensure that employees not only understand what’s expected of them and how they should proceed with tasks, it also establishes a system of controls on the day-to-day business operations and supplies.

Regular review is necessary

It is essential that small businesses establish a calendar to regularly review what they have in place, what they need, and if anything needs to be changed to meet the changes in the business. In the hectic pace of starting a small business, many of the necessary details get lost in the chaos.

Avante Insurance is here to help small business owners make the most of their dreams. Our expert team can assist you in reviewing what you have and what you need so your small business is better protected from the risks. Contact us at 305.648.7070 or complete our online form.