Most entrepreneurs focus on getting their product to the market and selling it in an effective manner. They believe that the biggest danger will come from lack of sales. Unfortunately, this can leave them open to be blindsided by other matters such as lawsuits and ownership or control issues. To avoid these devastating occurrences, you should do the following.
According to the Silicon Valley Bank, there are several useful types of insurance for startups. One of the most important is general liability insurance. This can help you if someone files a claim against your company due to a faulty product. If you have commercial property, commercial property insurance can help you recover if the property is damaged or stolen. If you have employees, you should definitely have workers compensation insurance. This will help cover the costs of medical bills if a worker is injured on the job and you are held liable. You can even get continuation insurance which helps replace your income if an unexpected event causes your business operations to be suspended.
Create a Succession Plan
If for some reason you need to leave the company, either due to your death, injury, or other unforeseen circumstance, you don’t want the business to fall apart. You’ve put a lot of work into it and you don’t want that to go to waste. A succession plan details who ownership or leadership of the company goes to if you are unable to fulfill that role. To make sure that your succession plan is followed, you need to do several things. According to attorney Josh Freeman, converting your business into a sellable asset is a critical step in a succession plan. Getting this done can help the transition process go quickly. Consult with a business lawyer for help in crafting a binding plan.
If you aren’t the sole owner of your company, you should have an operating agreement or other binding document that dictates how the company should be run. In the case of a dispute between owners, this document can help prove which individual is at fault. Your operating agreement can be an excellent way for you to protect yourself from losing control of your own company. If you don’t have an operating agreement, your business will be governed by your state’s default rules. Since your business is unique to other businesses, relying on blanket rules from the state is not a good idea.
Following this advice may take some time and money, but it will be worth it. You’ll benefit greatly from the peace of mind that your business is protected against accident, disaster, and legal claims. Failing to follow this advice could result in your business disappearing right before your eyes.
Read this next: Best 5 Tips for Small Businesses for 2021