Longevity and Prosperity: 3 Things That Every Small Business Should Do To Survive
All business ventures have some inherent risk of failure. However, medium and large companies are much better positioned to absorb risks which may very likely deal a death blow to small businesses. Most risks are preventable, manageable, or capable of being minimized by appropriate actions. The following are three things that small businesses can do in order to survive exposure to business-destroying risks.
1. Insurance Protection
The first and most evident step is to get insurance protection. It's among the foremost business policies to have general liability coverage. This type of policy provides protection against lawsuits arising from:
Product Failure; and/or
Injury to customer on business premises.
Another type of insurance for businesses is the Business Owner’s Policy, which is even more extensive and offers coverage in the following circumstances:
Medical payments; and/or
Damages to rented/leased premises.
Also, in terms of getting insurance coverage, small business owners really ought to have life insurance policies in place. This is essential if the business is the major or only source of income for the family.
2. Structuring Against Financial Liabilities
Small business owners are generally advised to have financial provisions that will allow them to operate without an income or profit for at least 1 year. Most will even forego paying themselves an income as an acceptable sacrifice to grow their business. However, as a result of this, their assets may be at risk, especially if they have used their property as collateral to establish the business or acquired personal loans to get started.
Choosing a form of business that allows for protection of personal assets particularly in any of the situations mentioned above is key. Additionally, a structure that minimizes tax liability for the business owner and a structure that is more likely to have a higher approval rating by potential investors makes it absolutely crucial that professional advice is sought in the final decision concerning the choice of the business structure.
3. Standardized Operational Systems
The third type of action that small business owners should take to minimize risks that challenges the viability and longevity of their business is the standardizing of processes, procedures, and personnel training. Making sure that there is consistency in these elements will prevent deviation from the quality of products and services that customers are expecting from the business. This is what I refer to as minding the “Ps” to achieve a major “Q” of business efficiency.
Establishing standardized systems, especially in a business in which there is there is a product or merchandise being repeatedly marketed to customers, cannot be exaggerated.
There are additional areas of risks that are more specific to particular businesses; therefore, it is important that small businesses carry out a risk assessment internally or get external assistance to do so. While it is not possible to eliminate every risk, identifying what they are, taking preventable actions, and implementing a risk management strategy will substantially reduce serious challenges to the survival and success of a small business. In the words of the inimitable Mr. Spock from Start Trek, the three things that have been addressed here will help your business to "live long and prosper!"