How to Protect Your Small Business

Schoolar

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posted on 12 years ago — updated on 1 second ago

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Most small businesses are begun as simple ideas, and grow into successful enterprises because of the motivation and entrepreneurial enthusiasm of their owners. As your small business becomes more successful, it also becomes more vulnerable. There are many potential disasters that can harm your business, and you need to be prepared to defend yourself as you grow. Protect your small business from technological and financial threats as well as threats to its reputation by being prepared and vigilant about prevention strategies.

Steps

Protecting Against Financial Threats

Protect your small business from potential lawsuits. Lawsuits can be expensive, even if you are confident that you will win. You will still have to pay for legal representation and spend a lot of time defending your company. Watch your actions and words. Avoid doing business with people who have a reputation for unscrupulous behavior and do not engage in questionable business practices.Protect Your Small Business Step 1Bullet1.jpg Be careful of conflicts of interest. Avoid situations that could be perceived as suspicious as well.Protect Your Small Business Step 1Bullet2.jpg Insure your small business. Make sure you have enough liability insurance and consider additional coverage such as errors and omissions insurance or a directors and officers (D&O) policy if you operate under a board of directors.Protect Your Small Business Step 1Bullet3.jpg

Assess your ability to withstand a catastrophe. An unexpected disaster such as a fire or a hurricane could destroy your business, leaving you without income or a plan to rebuild. Talk to your insurance agent about what is appropriate for your small business. Each business has different needs.Protect Your Small Business Step 2Bullet1.jpg Develop a crisis plan. If disaster strikes, you and your employees should know exactly what to do. Include plans for any inventory, technology and how you will communicate with your customers.Protect Your Small Business Step 2Bullet2.jpg

Watch your cash and profits. Keep checks and balances and other controls in place to avoid being robbed or losing your hard-earned profits. Be careful who you hire. Conduct background checks and screen all employees and consultants, especially those with access to company finances.Protect Your Small Business Step 3Bullet1.jpg Audit your business finances at least every quarter.Protect Your Small Business Step 3Bullet2.jpg Require timely payments from clients and customers. Waiting for payments can cause cash flow problems. Insist on payment for services and goods within a reasonable amount of time, such as 30 days.Protect Your Small Business Step 3Bullet3.jpg

Work with a good tax attorney or financial advisor. Small businesses are eligible for many tax breaks. Make sure you are taking advantage of all of them.

Protecting Against Technological Threats

Understand cyber crimes and your company's vulnerability. Hackers often target small businesses because they have less computer security than large corporations.

Keep all of your data and intellectual property protected. Use antivirus software and install a firewall for your network.

Hire an IT expert to perform a risk assessment and recommend additional measures. A data breach could be damaging for your small business, especially if a hacker can access your financial information, or that of your customers.

Keep your intellectual property in your own hands. File for intellectual property (IP) protection through the U.S. Patent and Trademark office.

Protecting Against Threats to Your Reputation

Use social media responsibly. While most small businesses can benefit from Facebook pages and Twitter profiles, remember that the digital dialogue can include people unhappy with your business. Use online conversations to promote your products and services, and invite your customers and clients to discuss what they like about working with you. Do not overreact to negative comments. Deleting anything that sheds unfavorable light on your small business might damage your reputation even more. You want to be transparent. Have a trusted customer or supportive partner respond to any attacks against your business with a positive story or testimonial.

Develop a crisis communications plan. If something happens that can damage your reputation, you need to be prepared. Prepare a plan to respond to customers, the media and any other stakeholders.

Consider working with a public relations professional. Keeping a PR team on retainer might be prohibitive for your small business. However, talk to PR professionals about engaging their services on a per-project basis.