Starting a business provides you with the opportunity to pursue and live your dreams and earn a profit. Unfortunately, there are a number of risks associated with running your own business. This includes financial, competitive, operational, environmental and other business risks. The type of business you run will dictate exactly what extents each of the primary risks are. The following are the top four ways to reduce your startup business risk.
1) Create a Business Plan
The business plan is not something to skip due to being optimistic about your business. Your business plan should include every facet of your business, including startup costs financial considerations, employees needs, and analysis of potential changes throughout the course of business. The business plan is necessary if you are applying for a business loan, but that is not the only reason you need to create it.
2) Intellectual Property
One of your biggest challenges is attempting to rise above your competition, if that’s your goal. Throughout the course of running your business, you need to keep up with what your main competition is going and make sure to improve your own business plan as others do. One way to keep up with them is by protecting your own intellectual property with patents and intellectual property insurance, especially if you have a unique business model.
3) Obtain Business Insurance
Insuring your business is essential for your wide variety of risks. While other steps should be taken to mitigate your risks as much as possible, business insurance is there for things that could not have been avoided. Get business insurance for things like crime and cyber liability, workers’ compensation insurance for your employees, general liability insurance and professional liability insurance. These policies will cover your primary risks, especially in the case of a mistake that could end up costing you quite a bit of your business assets.
4) Legal Contracts
Having legal contracts written up for various transactions is another thing that must be done in business, especially in order to reduce your startup risks. When you first start your company, you may have vendors or clients that seem trustworthy and like nothing could possibly go wrong. But is an unfortunate mistake new business owners make, that end up getting them in a lot more trouble than they anticipated. Also consider the fact that the contract doesn’t just protect you, but other parties involved.
Your startup business has a wide range of risks that each need to be protected and avoided in different ways. Consider your most prevalent risks and look to prevent those first, followed by the less common ones.