The dream of a small business can quickly turn into a nightmare. Sadly, approximately 50 percent of small businesses don't make it to their fifth year. If you want your small business to be one of the 50 percent that do end up being successful, it'll take patience, hard work and paying attention to the following four areas that -- when neglected -- could, unfortunately, lead to the demise of your start-up company.
Have the Proper Insurance
If you are like many other small business owners, you are probably always on the lookout for ways to cut expenses. Think twice, however, before cutting back on your insurance. If you don't have the appropriate coverage, for instance, and someone were to get injured on your property, that person could end up suing your company and possibly ruining it financially. So take the time to:
- Check on your coverage. Don't assume, for example, that your homeowner's insurance will cover a business that is being run out of your house. In fact, your insurance company might even deny claims related to your home if they discover that you have a business operating within its four walls.
- Consider carrying business interruption coverage. This type of policy is designed to cover your payments if your business has to close temporarily. Business interruption coverage is especially important if your entity is located in an area prone to bad storms, such as tornadoes or hurricanes.
Maintain Your Property
Speaking of insurance -- your best insurance may be a good offence. Walk your property to look for areas that could cause you potential lawsuits and then get rid of them: For example:
- Inspect any trees on your property. Take down any that have died and also prune branches that appear to be in danger of falling.
- Walk your parking lot and look for dangerous spots such as potholes and large cracks. If you find any, it's important to have your parking lot's asphalt repaved from a company like Superior Paving Surrey. Unfortunately, if a person were to step in a pothole and twist or break their ankle, you could be liable.
Create a Separate Entity for Your Business
If you are running your business as a sole proprietorship, it would be in your best interest to change that. According to Canada Business Network, having your business remain as a sole proprietorship means that you, personally, could be responsible for all of the debts and obligations of your business. Unfortunately, that means potential creditors could go after your personal assets as well as your business assets. To protect yourself, you should form a corporation, which will help protect your personal assets from creditors seeking more money than your business actually has.
While you might want to do your neighbor a favor by hiring their unemployed teenage son, you could be saddling yourself with a problem if you don't do your due diligence. Bad employees could potentially steal from you, give your business the wrong image or sue you if you try to fire them. To protect yourself, always:
- Check references. Even if you are hiring your nephew or your best friend's daughter, you should always ask for and check on references.
- Have employees sign an employment agreement. Your employees need to understand the hours you expect them to work, the appropriate conduct and dress, and reasons why you could terminate their employment.
- Trust your instincts. You want employees that will represent the culture of your business. So hire employees that you feel will reflect your values and the tone you want your business to set. That means you may have to turn down a candidate that may be well qualified but has a personality that is at odds with the culture you are trying to establish.
By paying attention to these four areas, your company will have a better chance of getting successfully off of the ground.