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6 Ways to Protect Your Startup From Potential Risks

Starting your own business can be one of the most rewarding and fulfilling experiences of your life, but it can also be terrifying and stressful. You’re not only taking on the responsibility of starting a successful business, but you’re also putting in all the hard work to keep it going strong. Don’t let the stress get to you!

With this guide to keeping your startup protected, you’ll be able to start your business with confidence and ease. It will allow you to focus on what matters most—your business.

Get the Right Insurance

You don’t want your business to suffer if you can’t do your job. Make sure that doesn’t happen by taking out insurance. Whether it’s disability, life, or property, having a good grasp of your risks and how much coverage is necessary should be at the top of your priority list. Unfortunately, getting good insurance can be tough, so working with a professional insurance broker instead of an online comparison site is advisable.

Get insurance for your business as well. It should protect you from all risks associated with starting a new business and give you peace of mind, knowing that you can manage any loss or damage that might come along during the startup phase. For example, legal liability coverage covers your company if someone sues because of a problem with your product or service. Without it, you could lose everything.

Hire Lawyers to Draft Contracts
lawyer presenting a contract to an individual

All small businesses need to have formal, legal contracts in place. Although you can easily draw up your contract, it’s probably a good idea to employ an attorney or business consultant with experience in doing so. Asking friends and family members who might know an attorney isn’t a bad starting point, but be sure to inquire about their rates before hiring them.

The average cost of hiring an experienced lawyer might be expensive per hour, so make sure that you get every last dollar’s worth out of them if they are going to draft your contractual agreements on your behalf.

Pay for Cyber Security Services

The average cost of a data breach can reach up to $3.92M, yet most small businesses fail to implement even basic cyber protection measures. Hiring cyber security services such as IT outsourcing and cloud backup will help prevent computer viruses, phishing scams, and other forms of cyberattack.

If your business uses social media or creates its website, consider investing in a cyber liability policy to protect against digital risks. When dealing with large enterprises, small businesses may opt for an online security partner that can provide information on best practices and immediate solutions should there be a problem.

Enlist Employees Carefully

When you’re starting a business, you have a lot on your plate. But, without employees, you can’t hope to grow your startup into something big and beautiful. So it’s crucial that when hiring new employees, you take precautions against possible future lawsuits.

A simple precaution is reviewing their personal credit history and past employment history before offering them a job. Credit checks help you gauge how responsible they are. Don’t hire them if they ever had legal troubles at previous jobs. You wouldn’t want to risk having an employee sue you for breaking federal discrimination laws.

Register at All Government Bodies

You don’t want a bureaucrat rejecting your business because you forgot to file some forms or pay a fee. In many countries, you need to register as a company with your local chamber of commerce and at your state/provincial office. You also need to make sure your business name is available for use in that jurisdiction.

Registering your entity might cost money, but it’s worth it. Not only will it save time and hassle down the road, but it can also potentially save your startup tens of thousands of dollars in fees if you forget to register intellectual property like trademarks and patents.

Invest in Licenses

Investing in licenses before you open your doors can help you avoid fines and keep your customers safe. Business owners should also have product liability insurance, which protects them from lawsuits if someone is injured while using their products. If you make or design any part of your company’s product, be sure to get patent protection for it. Otherwise, it will remain open for others to make and sell, undercutting yours—an all-too-common problem among budding business owners.

The Bottom Line

Protecting your startup is just as important as starting it to avoid risk. You have probably read tips on how to get started with a startup, but the additional ones above can be a big help to your business. It doesn’t matter if you have a small, large, or even no investment. Protecting your assets from harm is crucial regardless of size.

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