Mistakes happen. It’s a fact of life! Legal advice and proper planning, however, can help to either eliminate the risks involved, or to effectively minimize the impact of bad acts and events.
Business owners take risks in the form of capital investments, hiring personnel, and investing in new products. Realistically, not all risk can be eliminated, but you can learn some basic ways to manage risk in your business, thus avoiding preventable loses and minimizing those associated with higher risk activities and ventures. Success means different things to different people. Reducing business risk, however, is a universal consideration for defining the meaning of success.
1. Follow your plan.
When you are starting and developing your business, you should create a business plan that outlines all aspects of your operations from marketing to revenue projection. Every quarter you should re-evaluate your business plan to incorporate any changes within your company. A dynamic but efficient business plan will help you manage the risk you face when running your business.
2. Purchase insurance.
From beginning to end, all aspects of your business requires insurance protection, some of which is mandated by law. Interacting with the public, or selling to businesses, introduces you and your company to risk everyday! Your product could cause a serious accident that customers may decide to hold you liable for. Frivolous lawsuit filings are becoming more commonplace in today’s litigious society. To defend yourself and manage both the predictable and unpredictable risks involved, you must purchase liability insurance. Liability insurance can help protect your business assets from lawsuit judgment collection resulting from personal injury, or a customer’s loss of revenue
3. Monitor your business.
In order to manage risk you must take the steps to determine when the risk occurred. Just as you would take the time to analyze the market to determine your target clientele, you should monitor your ongoing business activities and try to determine where you may experience risk. This includes monitoring competition, changes in the marketplace, and shortcomings in your company’s procedures. You may find that your quality-control procedures are not comprehensive enough to prevent defects. Potential risk should be identified, then steps taken to either eliminate or significantly reduce the downside of such risk events to you and to your company.
If you have further questions, continue and follow our Risk Manager on Your Side or contact Bruce Smith at Goosmann Law Firm, 410 5th Street, Sioux City, Iowa 51101. Phone: 712-226-4000.
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