When Bad Things Happen to Good Businesses

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on Thursday, 06 March 2014 in Blog Posts

planSeven Tips to Help Your Business Plan for the Unexpected

No matter how well-intentioned one is when starting a business, there will be days when things do not go as planned. Sometimes, problems arise that may be unexpected such as a workplace accident, frivolous lawsuit, or natural disaster, and it’s often how well a company has planned for adversity that determines a company’s future.

Here are a few tips to help you prepare for the unexpected:

1. Ensure that your company is properly set up for the type of business you intend to do. Spend time determining what type of entity your company should be, and be certain that if your future plans include expansion that you will be able to accommodate growth to additional jurisdictions or countries.

2. Be properly insured for your type of business. Certainly, there are specific statutory requirements, such as Worker’s Compensation Insurance, but you should also have a professional provide you with an opinion as to what other insurance you should require. Also, don’t forget to check any insurance requirements that your customers may have of your company. This can be especially important should you plan on performing work on your customers’ premises, or should any supply agreement you enter into with a customer include an indemnity clause.

3. Speaking of supply agreements, if your company is especially dependent upon a particular supplier for goods or services, you may want to enter into formal supply agreements with your vendors before you find yourself with large liabilities such as loans or other commitments. With supply agreements, at a minimum, you should be able to protect yourself against unforeseen price hikes, but you may also be able to define limits of liability for substandard product you may receive. Taking the time to determine who is responsible for what will seem like a very wise investment should you ever have a dispute with suppliers in the future.

4. Before you utilize an independent contractor, be certain that both you and the contractor are aware of what party of is responsible for all aspects of the job, including insurance and licenses by entering into a written agreement. Also, particularly in cases where you utilize a contractor to develop intellectual property, ensure that your agreement details who owns the work once the contractor has completed their work.

5. Determine if the work you do requires trademark or copyright protection, and if so, ensure that your processes accommodate prompt registration.

6. Take the time to make and maintain accurate records. Sometimes, taking the time to keep proper records can seem like a burden, but that time is nothing compared to the time you’ll spend sorting out the mess caused by not keeping proper records. Also, and this should be very obvious to everyone this day and age, ensure that any electronically kept records are regularly backed up off site of your business by a reliable service.

7. Finally, and most importantly, I urge you to operate your business honestly. Being in the habit of dealing parties such as customers, vendors, and employees honestly will make it much easier for your business to accommodate unexpected challenges.

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