Startups are a lot like infants. They come into the world vulnerable and needy. And it's your job, as the founder, to protect your new business much like a parent would with a helpless baby.
Businesses face numerous risks from the start. And in many regards, it's your ability to protect your fledgling business during these early days that makes or breaks your chances of long-term success. In light of this, here are a few practical tips you may find valuable in your pursuit of growth and stability:
One of the first steps every business owner should take is to form the correct legal entity. This legal entity will provide tax advantages as well as certain asset protections. The most common types of legal entities include:
Consult with a business attorney to determine which one of these entities is best. It depends on a variety of factors - so it's wise to have some expertise in your corner.
One of the biggest risks you face is having your intellectual property (IP) stolen by a competitor. Thus, if you want to keep your business safe, you need to invest in proper IP protection.
Proper IP protection will vary depending on what you're trying to safeguard. If it's a particular product or process, you might be able to get a patent. There's also something to be said for establishing a noteworthy brand so that the marketplace is clear about where the idea has originated from.
Insurance isn't something business owners get excited about, but it plays a key role in protecting your business from unnecessary risk. And there are a few policies in particular that everyone should consider:
The right combination of insurance policies will prevent your business from being wrecked in one fell swoop. At the very least, it gives you time to figure out how to proceed.
"Don't get sued" sounds like very generic advice, but there are actually a handful of practical steps you can take to dramatically lower your odds of facing a lawsuit.
The biggest rule of thumb is to watch what you say and do. If you say you're going to do something, follow through. If there could be a potential conflict of interest, stay away from that particular dealing. (It's simple advice, but is much more challenging to follow when you're in the heat of battle. Make sure you set up plans and processes that allow you to avoid compromising situations such as these.
There's no way to completely insulate your business from all risks. You can, however, establish a strong foundation upon which you stand a much better chance of being successful. Don't feel like you need to do everything in this article. Instead, take a couple digestible pieces and put them into action. Success is found in movement. So anything you do to move will inevitably propel you forward.