Owning a business is a big responsibility. If you aren’t careful, it can also be a tremendous liability. You can reduce that risk by implementing effective mitigation strategies.
1. Choose the Right Business Structure
This is the absolute first step a business should take once it is ready to get off the ground. The right business structure will reduce your personal liability and help you manage risks. Which one is best for you will depend on factors like the number of principles involved and what industry you are in. Most people will choose from one of these four options:
- Sole proprietorship
- Limited Liability Company (LLC)
2. Secure the Right Insurance
Business liability insurance is required in most places, and for good reason. If someone is injured at your business or by a product it sold, or if you face legal action for negligence or abuse, the right insurance coverage will protect your assets. For that reason, it is a key component in effective loss prevention strategies.
3. Institute a Comprehensive Training Program
When you bring on new staff or change procedures, it is important that everyone understands the processes your business uses. That means training. Everyone should have a basic understanding of general procedures in addition to the specifics for their role. In some cases, you may want to implement an ongoing continuing education program to ensure everyone stays up to date on changes in the workplace.
4. Develop an Accident Reporting System
No matter how safe working conditions are, accidents happen. Minimize the potential for serious injury and legal action by having a reporting system in place. This should require the completion of an accident report that details the incident and any care that was offered, provided or refused.
Every business will have its own set of risks that need to be managed. However, some are common to nearly all companies. Have a risk analysis performed to evaluate where your strengths and weaknesses are, and then work to improve outcomes and reduce liability.