Cane Bay Partners is a management consulting firm located in the U.S. Virgin Islands on the island of St. Croix. One of their areas of specialty is risk management, which involves identifying potential threats to a business and taking steps to minimize the damage if those threatening events occur. To help small business owners protect their businesses, they offer the following risk management tips.
Protect Personal Assets
Business owners who have either a sole proprietorship or a general partnership are not protected from personal liability. In other words, if a business goes into debt, the business owner or owners may have to pay creditors from their personal accounts or sell their private possessions. To avoid this risk, it’s better to set up a business as a limited liability corporation (LLC) or a corporation.
Choose The Right Insurance Product Or Products
Although no one can predict when a flood, a burglary, a lawsuit, or other costly events will occur, it is a safe bet that something will go wrong at some point. One of the best and most important ways to minimize losses is to have sufficient insurance coverage. Some types of insurance to consider include general business insurance, liability insurance, business interruption insurance, and workers’ compensation insurance.
Put Everything In Writing
Every company policy, employee agreement, and client transaction should be put in writing, and it’s best to have an attorney go over any contract with a fine-toothed comb before the contract is signed. Many business owners have their employees sign a non-disclosure agreement to protect company secrets from the competition.
Invest In Digital Security
Most businesses today keep records in digital form. Unfortunately, valuable data can be compromised through hacking, viruses and, of course, fire. It’s important to have a plan for backing up data and to make sure all security protocols are up to date.
Screen New Hires
An employee who is dishonest or incompetent can pose a real threat to a business. Thus, it’s important to screen new hires thoroughly before bringing them on board. In addition to a criminal background check, employers should take time to contact references, check out the applicant’s online presence, and ask multiple trusted colleagues to participate in the interview and give feedback.