Risk management tips for entrepreneurs
When you first decided to go into business for yourself, you knew there was going to be a certain amount of risk involved. The good news is, much of that risk can be mitigated if you take the time to prevent it from happening in the first place.
Here are a few steps to put you on the right path to keeping your business as risk-free as possible.
Examine every aspect of your business and determine potential risks.
Some of the more common risks that small business owners face are around property and liability.
- Property risks (indoor and outdoor). Damaged flooring or walkways could lead to slips, trips or falls. Unlocked windows, poor locks on doors or unsecured valuables are an open invitation to thieves. And improper storage of flammables like paint, gasoline or oily rags is just asking for trouble.
- Liability risks. Someone slips and falls on an icy patch while visiting your property. A product you sold to a customer is faulty and causes injury. One of your customers claims you failed to deliver what was outlined in a contract or that you mismanaged a project. Or you unintentionally used an already trademarked slogan as part of your new advertising campaign. These are common scenarios that could result in costly lawsuits.
Put a prevention plan in place for each risk and create contingencies
- Good housekeeping. Good housekeeping practices reduce your chances of fires, accidents and injuries. Keep flooring, stairwells and walkways in good repair and free of debris. Ensure that storage areas are kept neat and organized, and waste is separated by type (wood, paper, combustibles) and stored away from the building.
- Smoke detectors are a must – and depending on your business, you might also want to look into a good sprinkler system. To prevent break-ins, ensure that doors and windows have proper locks and that you have a security alarm system in place.
- Employee training. Make sure that employees are trained on what to do in the event of an emergency, that they know how to use equipment properly and that they’re provided with the proper safety protection. Implement regular drills to go over emergency procedures and evacuation plans.
And of course…
Make sure you have the right insurance coverage
At the very least, you must have general liability insurance. It covers injuries to customers, suppliers, employees or visitors to your property. It will also cover you if you (or your staff) are conducting business off-site and cause injury to a third party or their property.
Before you decide on what kind of extra insurance to obtain, you should evaluate your current and historic balance sheets to see how much extra money you have each month. Once your bookkeeping program demonstrates that you can afford more insurance, here are a few other coverages to consider:
- Product liability.This coverage protects you if a product you manufacture or sell turns out to be defective or if there are inaccuracies in the assembly instructions or warnings.
- Professional liability.If one of your customers claims that you failed to deliver on what was outlined in a contract or that you mismanaged a project, professional liability insurance will cover legal costs and expenses. It would also apply to medical professionals being sued for malpractice.
- Cyber liability. Consider this: 69% of companies in a 2012 Canadian study reported being the victim of a cybercrime – 31% of those companies were small to medium-sized businesses. Just as you’d need a separate crime policy for theft of money, a cybercrime policy is needed for data-related losses.
TruShield Insurance® is the small business division of Federated Insurance. When it comes to insuring your business, we’ll provide you with the property, general liability and automobile coverage you need. You can also look to us for life, disability, critical illness, and group health insurance for businesses with one or more employees.
This article is provided by TruShield Insurance® for informational purposes only to augment your own internal safety, compliance and risk management practices, and is not intended as a substitute for assessment or other professional advice by a qualified person or entity. TruShield Insurance makes no representations or warranties regarding the accuracy or completeness of the information contained in this document. TruShield Insurance shall not be responsible in any manner for any loss, or any direct, indirect, consequential, special, punitive or other damages, arising out of your, or any other person’s, use or reliance on the information contained in this document.