Starting a business opens the doors to loss and liability. In today’s uncertain climate, the potential for risk is higher than ever. It is critical to protect your business by developing a business strategy focused on risk avoidance.
What is Risk Avoidance?
Risk avoidance strategies are steps businesses can take to proactively protect themselves from loss of income, plummeting sales, and legal liability. While no one can foresee every possible risk, there are still techniques businesses can use to minimize potential damage.
The Importance of Risk Avoidance
Risk avoidance is critical to protect the time and money that go into establishing a business. The nature of a particular business will dictate which types of risks are most likely to occur and most important to prevent. The following are some broad risk avoidance strategies businesses can implement.
- Protect your finances. Minimize financial risks with a two-pronged approach: keep your business debt low and your customer payments high. Identify customers with outstanding balances or poor credit and take steps to ensure they pay you on time. You may need to require advance payments from customers with poor payment histories.
- Build sales through marketing. While a few industries, such as home improvement and home entertainment, have flourished during the coronavirus shutdown, many more have suffered. Bolstering marketing is one strategy to draw consumers back to your business and bring in more revenue.
- Prepare for remote working. Not every business can allow employees to work from home, but if yours can, you should. State laws may require it, but even if they do not, requiring people to work in person during the pandemic may open your business to liability for claims of negligence or illness.
- Insure your business. Insurance can protect your business from potentially devastating litigation. The right insurance policies for your business depend on the type of business you conduct. Here are four useful policies for businesses:
- Professional liability insurance protects against claims of negligence.
- General liability insurance protects against personal injury such as libel and claims of accidental property damage or bodily injury.
- Business owners’ policies provide general liability and property insurance for your business.
- Cybersecurity insurance protects against digital risks. It is especially important for businesses that accept credit cards or other forms of digital payment.