 By now you should have begun planning for 2017. Ideally you are looking at the things that worked and did not work in 2016. You are probably looking at the “hot trends” and figuring out how to incorporate those trends into your business. But before you finish planning, there are some things you need to know and prepare for.
1. 2017 is going to be crazy! If you think things will be calm once the 2016 US election is over, you are mistaken. The US is in the middle of a political battle the likes of which it has never experienced in its young life. This is clearly going to cause shifts in the markets and create customer uncertainty. Depending on your business model, you should expect fluctuation. With the Republicans already threatening to upend the political system if Clinton wins the presidency and Democrats attempting to make an impact on young idealized voters, you can expect more division not less. This means that every month, week or day, there could be new that causes panic. Be ready to ride the roller-coaster. 2. Innovation is necessary! No, you do not have to be the next Steve Jobs. You just need to think outside of the box. Expand your mind and your horizons. This means you must look toward the future and find out what is “new” in your industry. It starts with understanding your customer base and what they want. How can you implement those things? How can you do it better? Innovation is not about creating something new, it is about improving what exists. You should always be focused on this. And if you cannot, you should allow employees to focus on it. Too often, business owners are focused on the here and now. That is important. However, knowing where your customer is going in the future means that you will be the head and not the tail! 3. Collaborate and consolidate! If you are looking to expand, consider using an existing business to do so. There is a reason that large businesses merge. They do so in an effort to be ahead of the completion and creating a competitive market immediately. Expansion can come in the form of buying another business, merging or collaborating. The baby boomer generations is entering into retirement and selling their businesses. This allows younger business owners to expand through purchase and also have help in the way of outgoing owners. In addition, merging or collaborating with like businesses can help expand your market and reach more customers. 4. Consider making your own app! For those of use that are technologically challenged, this seems overwhelming and difficult. It doesn’t have to be. How can you make it easier for your customers to deal with you? Can they pay online? Can the schedule their appointments? There are a few App creators available on Google Play and iTunes. There are also other sites that provide for free App building. To the extent that you can add this feature to your business, you should. 5. Be a connector! Even with all of the information out there, it is difficult to distinguish the good from the bad. While many “do it yourselfers” (including myself) like to do their own research, ultimately they will go to someone to ask for help. Even if you provide certain goods and services directly to consumers, consider adding connecting to your business model. Whether you charge or offer it for free, it will be a necessary part of your business model.
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 As an attorney, I have seen many business partners break up. For the most part, there really is no super villain in the tale. It is usually a misunderstanding or lack of communication that causes a rift. Someone gets angry and… poof! All of the hard work and dedication to building a business goes out of the window. All of the trust and respect that once permeated the relationship is gone.
First, let me say that I have experienced the negative fallout of a business relationship going bad. While the “death” of the business had nothing to do with me, I still feel the effects of the negativity and bad taste left in the depths of my soul. Enough to say, that I may never go into business with anyone again. After having a conversation with a client who was going through a business break up. My client said there were signs that things were about to go wrong. But he thought he could endure it and make the business profitable. I have to say, I felt the same way at some point prior to the breakup of the business I was involved in. I have often said business relationships are like marriage. You have to communicate and you have to have trust. Without those things, the relationship is doomed. Here are a few things that I have learned about handling a business breakup: Lesson one: Everyone Loses! The litigation process in a business breakup is long and expensive. If you get what you want (or something near to what you wanted) you also pay a big price for it. Financially and emotionally it can take a big toll on you. Each side is painted as a villain and the work you did that was once praised is now what doomed the relationship. The worst part is that everyone thinks they are right. Because of this, litigation drags on until the only people being paid are the attorney’s. If you are lucky you may get a payout. If not, you go home with your moral victory. Knowing in the end you were right. Or worse, you were right and you still lost. It is enough to make you write off going into business with anyone ever again. Lesson two: You cannot predict a person’s reaction to circumstances. I generally find that a business breakup is precipitated by an individual’s change in personal circumstances. Someone is going through a divorce, a death in the family, financial pressures. They need someone to blame or at least yell at. Because other parts of their lives are not controllable you as the partner become fair game. Another reason is ego. One thinks that if they get rid of another partner they can do what they want. Have more control, make more money. The value that you once had is no longer desired when they believe they can get it somewhere else or it is just no longer necessary. “Thanks! I can take it from here.” This then turns into an argument about who really contributed what to the company. The people who were once vital now become pointless. The next time someone asks for your help, you are liable to poke them in the eye! Lesson three: Move on and let it go. At some point you have to move on from the business. At times this can be easier said than done because it is hard to let go of the hurt and disappointment of the business fall out. I often think about the Facebook “creation” lawsuit. Mark Zuckerberg is hailed as a genius now. Many forget he was accused of stealing the platform for Facebook. The people whose ideas he took, have moved on. We don’t remember their names and faces. Do you think they are still angry? Maybe, but who wants to live life like that? It is best to take the positive experiences that you learned from your doomed business relationship and turn it into something positive. No one can take your knowledge away from you. Use it to increase your skills and relationships. There is no need to harbor negative feelings. If you have ever gone through a business breakup and survived it, you understand the importance of knowing what you did wrong. Hint: It was not trusting that SOB who tried to kick you out of the company. What you did wrong was thinking that nothing could ever go wrong. Most people are blindsided by the actions of a partner trying to purge the company. Truth is, there are signs. Ignoring them and pretending that they don’t exist doesn’t work. I truly believe that you cannot contract for everything. And even if you do, you cannot predict the extent people will go to get out of a contract. So stay diligent. That means keeping the lines of communication open and if you ever feel like there is a problem, get a third party that can help you work it out. It may not work, but at least you tried. At the end of the day, that is all that matters.  Contrary to popular belief, any consultant that you hire is neither a super-hero nor does he/she possess super-powers. While they may have a great deal of expensive education, significant industry experience, and/or a powerful brand name, given the right (or from the client’s perspective, wrong) conditions, a perfect storm will be created that destroys all hope for project success. However, this perfect storm can be avoided if both the client and the consultant take some simple steps to prevent its formation.
Here, and in subsequent articles, I will identify the elements of this perfect storm, and examine steps that both clients and consultants can take to mitigate each element of the storm. I stress that both parties should be involved in the process because all successful projects emerge out of a strong relationship between the one with the problem and the problem-solver, and because a successful project is the one goal that both parties should always have in common. Storm #1: Deciding on a solution before determining the problemOn TV shows such as ABC’s “Shark Tank” and in the rooms where venture capital pitch sessions are held, entrepreneurs are often scolded for selling a product that is a “solution without a problem.” While the entrepreneurial version of this phenomenon generally goes unsupported, the consulting version will often be funded, implemented/installed, and only derided later on when it is proven to be ineffective. This comes at great cost to the client (consulting fees, implementation fees, and removal fees) and the consultant (damaged reputation from client dissatisfaction). All too often, clients and consultants let their biases steer them towards a particular solution without fully examining all elements of the problem. Even worse, the demands of today’s fast paced environment lead to an impatience that places added pressure on executives and decision makers to skip or reduce time given to intangible evaluation activities so that they can get to the tangible solution designing and implementing activities faster. The latter are given more value because their deliverables are more palpable, and their costs are easier to justify. Consider a situation where a consulting firm was brought in by a manufacturing company to develop a plan to upgrade a major computer system used throughout the company. The accepted assumption was that all of the production and safety issues experienced were because the facilities either did not have the new computer system in place and were operating manually, or were operating older versions of the system, which did not have specific upgrades related to record-keeping. The consulting team’s mandate was to simply design the upgrades for the computer system. As the consulting team conducted interviews with the system users and performed a deep-drill into the operation, they uncovered that the true nature of the problem lay with the processes related to obtaining the records that needed to be maintained. Therefore, the upgraded system would not have solved the true problem, and the manufacturer would have spent a great deal of time and money before finding out that upgrading the system was not the true solution to their problems. Consultants should strive to be “Trusted Advisors” to their clients. This term implies reliance and confidence in the consultant and his/her advice. However, this confidence should earned and not just given blindly. In the same way one would be skeptical of a therapist that starts to dispense advice within the first five (5) minutes of a session, one should be similarly concerned of a consultant that is ready to execute a solution without a full analysis and determination of the problem. Look out for my next article, in which I will discuss storm #2, “Lack of buy-in from key stakeholders.” If you enjoyed this article, please stay connected with me to receive future posts. I also invite you to e-mail me at ljohnson@livicationbusinessgroup.com to learn more about how Livication Business Group, LLC can help you with your Technology Commercialization, Start-up Mentoring, and other Management Consulting needs.  I have to admit, I am not a techie. I typically get in the technological advances years after they enter the market. I remember finding email and cell phones useless. Now, I cannot live without them. I was late to Facebook, Twitter and LinkedIn. Twenty years from now I may get on Instagram (if it still exists). Saying all of that, I believe that if the technology is still around when I start using it, I can be assured it is here to stay.
That is not the case with Blab. I was late to Blab as well. I remember seeing people post about Blab and I truly had no idea what they were talking about. Frankly, I was still trying to understand Periscope. Once I finally understood Blab. I decided to move my monthly webinar to a weekly Blab. It all started off well until I saw a friend (the same one who showed me how to use Blab) do a Facebook Live post about how Blab was changing its focus. Several weeks later, I began seeing complaints about changes in Blab’s algorithms and how it is dying. Before, I had a chance to investigate, Blab shut down. Seemingly overnight, Blab shut down seeming overnight with only a sad post to users as an explanation. Question 1: Is it better to make what you want or what others want? One of the main reasons that Blab founders shut down the platform is because it was becoming something they did not envision. I can respect that. However, doesn’t conventional wisdom state that you go with the demand? Blab founders wanted to make a platform with millions of users. It was not pulling those types of numbers. Blab was exciting. Google+ and Periscope combined which made it exciting. However, without users, it is pointless. The people who used the platform where people who were “hang out” and people who were hosting their live shows. It was those live shows that were pulling the platform down. So much so, the founders felt the need to shut down the platform. Question 2: Does live streaming really suck? According to Blab founders the trend toward shows was making the platform worse, not better. As the host of my own show, I can say that I thought I was interesting. We had one dedicated supporter, but we never really gained much traction. Did it suck? Maybe. We can’t all be professionals. But Blab did not want to give my terrible show a home. So what is the point of a live stream app that does not what you to live stream? YouTube became so amazing because it gave people an opportunity to tell their own story. The true test of Darwin’s Theory through live streaming. The survival of the live stream fittest. Stars can and will be born. The truly terrible will die a quick and unnoticeable death. The mediocre will survive, but on scraps. However, Blab was not created to make you the next Oprah or Dr. Phil. Blab was created for group meetings, friend chatting, and other ways of communicating between individuals. I am not sure why Blab wants to be like the other platforms that are out there. Blab was truly something different, but then again, it all goes back to question number 1. Question 3: What is next for live streaming shows? There is no question that there are many live streaming apps that you have to choose from these days. That was not the case wen Blab started. We have, what I am calling the Trifecta, Periscope, Facebook Live, and YouTube Live. Facebook Live announced this summer that it was going to allow two person broadcasting. That can be useful for those with shows. But we all know that as soon as it becomes popular Facebook will start charging. Then there are other webinar and meeting platforms that essentially allow you to do the same thing as Blab did, but without the ability to have an audience find you while you are live. I just discovered this “new” platform called Crowdcast. It seems like it GoToMeeting meets Periscope meets Event Bright. So far I like what I see. So at the end of the day, what do we make of Blab’s demise (or shift)? Blab Founders blame lack of usage. I believe it was that Blab was not or could not adapt fast enough to keep up with the type of usage that was being demanded. Blab constantly changed its algorithms (like Facebook does all the time), but it changed to a point that made your show impossible to find. In the end, Blab became difficult to use. That is the opposite effect that you want to have if you are trying to increase the number of users on a platform.  I have heard that the opposite of love is not hate. It is indifference. Likewise, the opposite of confidence is not doubt. It is confusion. The ongoing question of can I or should I, plague our minds to the point that we are paralyzed and unable to move. As small business owners we are often confused as to how we approach our business, our customers, or even ourselves. It is that confusion that leads us to decisions that are damaging.
In an attempt to provide myself with comfort and release a cathartic hypothesis, I decided to share a piece of the brick from the road I am traveling. For those of you who don’t know, I am a lawyer. I practice in the greater Houston, Texas area. This year has been one of those years where I have had to look for any inkling of positivity to keep moving forward. It hasn’t necessarily been bad, but it hasn’t been great either. There have been deep valley lows and mountain top highs. This had kept my emotions on a roller coaster like path. One which I cannot seem to escape and that I have come to realize is part of the path to create the business I really want. Earlier this year, I took a case that I totally thought was winnable. It was a new client. I had come in late into the case, but the facts were not complicated and I thought we could come to some resolution. Long story short, I was completely wrong. Every attempt at compromise failed and we ended up going to trial. I thought we had a strong case and a good argument. The judge thought so too, as she ruled against us. Procedural and evidence issues, caused a massive loss to my client and my ego. At this point my confidence was shattered in a way that I honestly had never experienced before. I felt like a loser in the most literal and figurative senses imaginable. It was so devastating that I could not ever bare to tell anyone what happened. Epic fail was an understatement. Last year I took a case for a previous client. In all honesty, I never thought we would win. I told my client as much, but she insisted on moving forward. She had a strong conviction and was resolute in her position. I only took the case because we had a previous business relationship, I had no confidence that I would win. It took about a year before we obtained any ruling on this case. It was different from the other one as there was not a trial per say, but a host of hearings and written arguments from which the judge had to rule. This case was a crap shoot. We had a valid argument, but not a strong case. It was like threading a needle, we had to make one point and make that point so strongly that there was no other choice but to rule in our favor. I didn’t like my odds. But as luck would have it, the Judge did rule in our favor. I’m still stunned as I write this post. Facing the impossible odds (even other attorneys I spoke to about the case didn’t think it was winnable), we won. Despite the win, it did not and has not erased my devastating low from the previous loss of the winnable case. I lost a case that was impossible to lose and I won the case that I should have lost. So now I stand in this very uncomfortable situation. Can I really be confident in who I am and what I do when I lost a case that I should have one? Can I really doubt myself and think that I am worthless when I won a case I should have lost? It is a crazy place to be. I about others who experience this same phenomenon, and think about what I would say. For every negative thing, think of something positive that you have done. It doesn’t matter if they are of equal value. Then for every negative thing, give it 1 point. And every positive thing, give it 2 points. I say that because it is easier to think of the negative things first. It takes more time and thought to say what “good” you have done. After it is said and done, throw the paper away and remember that you are the best person you can be right now. Do not confuse one bad situation as a determination of your worth and value. John Stewart said that David Letterman told him not to equate the failure of his first talk show with the failure of the man. Likewise, don’t equate the failures you encounter as the failure of you!  With the explosion in the popularity of entrepreneurship in recent years, the concept of the “Startup Pitch” as part of an entrepreneurial gladiator’s artillery has become a staple of entrepreneurial discourse. From TV shows (e.g. ABC’s “Shark Tank”), to global competitions (e.g. Tech Crunch’s “Disrupt”), to local competitions (e.g. Rice University Business Plan competition in Houston), all the way to participating with incubators, accelerators, and co-working communities (e.g. the Houston Technology Center), entrepreneurs have been socialized to expect to pitch their startup idea at some point if they want it to become more than just an idea. However new or en vogue the concept is, the truth is that we have actually been doing pitches all of our lives, without even knowing it.
I recall many Saturday afternoons growing up in Trinidad & Tobago, wanting to join my friends at the movies but not having enough money for admission, snacks, etc. So I would always go to my mother first (I was the youngest, and the only boy) because she was always willing to give me what I asked for! However if she couldn’t help, I knew that I had to prepare myself to literally pitch the idea to my father, which typically entailed delivering him a mini business-plan that had to cover; what I needed the money for, what I was going to buy, how much everything cost, and what value was the activity going to bring to my life. If I couldn’t convince him, then I would be stuck at home watching re-runs, while my friends were watching double features. Needless to say, I got very good at figuring out what I needed, knowing my numbers, communicating my pain (at that point we only had 3 TV stations in Trinidad), and telling my story! Therefore, a startup pitch is simply the presentation of information used to persuade others to support a startup idea. They have become indispensable to the contemporary entrepreneur because they can help the startup gain four critical categories of supporters; Investors that can provide financial support, partners that can provide operational and technical support or access to larger markets, employees that become inspired by the startup’s vision and choose to come on board, and customers that love the product and show their loyalty to it with their money. So while it is always important to know and focus on your target audience, entrepreneurs should be aware that their pitch could often provide their only exposure to an important stakeholder that could rapidly change the trajectory of their business. Consider the case of the 2015 Greater Houston Black Chamber’s Mack H. Hannah, Jr. Upstart Award winner, Ms. Lydia Evans and her company Soaps, Washes, and Grooming (SWAG) Essentials. She was featured on an episode of “Shark Tank”, and though I found her pitch to be good, she did not leave the show with a deal from the ‘sharks’. What she did leave with was massive exposure and customer interest in her product, which increased the product sales exponentially. This allowed her to grow her business quickly and organically, both nationally and internationally, and exceed her entrepreneurial dreams. So why did she succeed despite not getting a deal on the show? I contend that while her pitch did not meet the fancy of the ‘sharks’ (investors) on the show, it did suitably convince the other stakeholders (customers, employees, and partners) to gain their invaluable support. As member of the Houston Technology Center’s (HTC) Energy Champions advisory group, I have the privilege of reviewing numerous startup pitches. To my surprise, the most impactful presentations that I have seen were not the ones with the most elaborate fonts, slickest animations, or even the ones done in Prezi! The most impactful presentations followed the same guidelines I used to get movie money from my father ages ago. They told a story, they identified a pain, they knew their numbers, and they communicated what they needed. Maybe this entrepreneurship-thing is really child’s play after all! If you enjoyed this article, please stay connected with me to receive future posts. I also invite you to e-mail me at ljohnson@livicationbusinessgroup.com to learn more about how Livication Business Group, LLC can help you with your Technology Commercialization, Start-up Mentoring, and other Management Consulting needs.  Unless you are a part of the travel industry or kid camps, summer is usually the slowest part of the season. Everyone is in vacation mode and are saving those extra dollars for the trips that they will be making. I personally find it excruciating and pointless to try and drum up “new” business during the summer. My sales drop off at an enormous rate and there is no getting around that. In the 16 years I have been in business, I can only remember two summers where there was not a Sahara Desert like drought going on. For years I would sulk, ramp up my advertising and sulk some more. I finally decided to stop sulking and put my “off season” to good use. If you have peaks and valleys in your business year, here is how you can take advantage.
Use the time to do something new. I now use summer to create and plan projects. I am usually up to my waist in paperwork so it is a good time to make sure that whatever new system I am putting in place can be implemented when things are not so busy. Sometimes I will buy new software and the downtime I have can be utilized getting familiar with it. Sometimes, I just need a week or two to clean house and can focus my time doing just that without many distractions. Use the time to put the things in action that you have always talked about doing but never did. Work on your strategic plan, try a new restaurant or meet friends for lunch. Put worries about the down season behind you and utilize it to revitalize yourself and your business. Reassess your strategic plan. If you have a strategic plan, now is a good time to revise and reset. If you do not have a strategic plan, now is the time to get one. Take the time to create your strategic plan and begin setting it in motion. I look at my strategic plan every three months. However, during the summer I take the time to evaluate my goals, make them clearer and improve my processes. I also use the time to create new marketing material. I also reach out to client to survey them and catch up on what they are doing. I use the time to say hello to find out if there is something more I should be doing. I use the time not to sell them something but to better understand how I can be a benefit to their business. It is a great opportunity to see if those things in my strategic plan are really worth doing. Have fun. Despite the fact that this is a normal part of my business, I still find it difficult. So I make an effort to spend time doing things that I enjoy. I will admit that may seem like slacking off to some but the truth is that you need time to reset. I may take day a week to not work and just focus on something personal. It may include hanging out with my kids, taking a short vacation or reading that book I had been meaning to read. The point being that it is fun and something that take my mind off what is going on at the moment. Those little distractions help me to come back, work harder and focus better. Sometimes I may go see a movie in the middle of the day. I know, I know, you are supposed to focus on your business 24/7 right? Nope! The reason there is an off season is so that you can take some time off. Use it to make yourself better not sadder. The offseason doesn’t have to be a downer. It can be an opportunity and you should treat it as just that!  Many small businesses wrestle with the idea of adding debt to their company. Deciding whether or not to get a business credit card, traditional loans or alternative financing can drive any business owner crazy. I have had clients who have obtained several loans and have ended up in dire straits when they are no longer to carry the burden of debt. I have also seen clients who successfully use debt to relieve a specific problem or issue to better their small business. Before you increase your business debt load, here are a few questions that you need to ask yourself:
Can your cash flow support the debt? Most business owners only consider the immediate need of obtaining financing to meet certain obligations. However the consideration should be when and how you are going to pay it back. Clearly understand why you need to add on more debt in the first place. If you need the financing to pay employees to cover gaps in customer payments, it may well be worth the added expense. However, if you are obtaining financing to pay “every day” bills, you may want to question that decision. That is because if you are having trouble making ends meet, adding debt is going to make your problems worse not better. Why do you need financing? This may be a simple question, but the answer may determine the type of financing you get. For example, if you are purchasing a building or an ongoing business, a traditional bank loan may be better. The interest rates are lower and it provides an opportunity to develop a good relationship with your banker. However, if you need it to buy more inventory. A less traditional loan may be beneficial, because it is not as restrictive. Understanding why you need the financing will allow you to explore various options. There are numerous opportunities to fund your business. Understanding which is right for you will mean understanding your need for the money in the first place. Can you afford the debt? I will be honest, I am not big on obtaining debt. I really try to pay cash for my expenses as necessary. I have had business credit cards and business loans. I found that when my business began to suffer, I could not manage the various debts. It caused more problems than it originally solved. When my business hit one speed bump, everything began to fall apart. Therefore, if your business cannot truly afford to add more debt, you should reconsider your options. Interest is an expense. That means for every dollar you borrow, it may cost a certain amount. Can you afford that extra cost? If you are hoping to rob Peter to pay Paul, go back to question one. If your business has no savings and few assets, the answer to this question may be no. As with everything, I am a moderate. I truly believe in balance. There are numerous “experts” and “analysts” who will debate whether or not businesses should have debt. I certainly do not subscribe to the “spend someone else’s money” camp, which suggests that increase is debt is best. I am also not a part of the “no debt ever” camp. For a small business, I believe this issue is personal and specific. Utilize your professional team (attorney, accountant or financial planner) to help you make the right decisions.  Many entrepreneurs work from home. For good reason! It is convenient, cost effective, and void of office drama. But there are times when your company is moving in a direction where being completely online is no longer viable. The biggest problem I see when virtual businesses move into brick in mortar is that they try to do too much.
If you have an online retail store, you should determine the purpose of moving into an office. Is it to have a brick and mortar store? Is it because your house is filled with inventory? Are you just tired of being in the house? Each of those things requires different types of space. Is your garage warehouse running out of space? Sometimes you just need more space to store items. If that is the case, you can consider a small storage unit. There are several units that can operate as workspace. Some have electricity or air conditioning. Some allow you to park the truck for delivery of items. If storage space is what you need, a unit dedicated to storage is probably your best bet. This option is cheaper and more efficient. You can rent on a monthly or yearly basis. If you determine that the space is not working for you, you can move without a lot of fuss. With this option you can still work from home as needed and only keep the inventory that is required for the day’s work. Do you need a private office or place to work? Many people know of virtual offices or office suites. Those options are certainly useful if you are not looking for a permanent office. Renting your own space could be expensive, especially if you have to furnish it yourself. However, if you have other friends that need space, you can go into an office sharing arrangement that allows you to lease your own space and share the rent. Many times, other professionals lease offices and allow office sharing. This may be a viable option for those in industries where referrals can be helpful. Paring a real estate agent and a travel agent in an office can work well for either party. Do you need to expand your office and hire employees? If the need for space expansion has more to do with adding people, the above options may not work for you. You need office and work space. With this type of expansion you have to prepare for the extra expenses. You don't only have additional wages to deal with, the office space could also be significant in cost. Long term leases tend to be better in these situations as you can take advantage of discounts. Determine the right type of space and location. If you need space where there is a lot of traffic, location is important as well as the overall aesthetic of the building. If client traffic is not an issue, building beauty and address may not be as important. Either way, you need to be comfortable with the building, its management and lease payments. Pay special attention to termination rights. If things do not go as planned, how flexible will your landlord be when it comes to giving you smaller space or letting you out of your lease early? Do not become overwhelmed by build-out and design of the space. Stay within a strict budget and try to include as much as possible within the lease terms. If you find yourself moving from virtual to real life office space, do your homework and focus on what matters. The survival of your business should be at the forefront of your office choices.  One thing I have a hard time convincing my clients about is having insurance. The number one reason my clients don’t have it, is the cost. The number two reason, they do not feel they have anything to lose. Insurance is expensive and you do have a lot to lose. The thought that if someone sued you, they would get nothing is a misconception of many small business owners.
When I explain to small business owners the costs of litigation, they seem surprised. Even with the technological advances, lawsuits are expensive. And, with the ease of access to the courts, more people are willing to test the system. They are willing to test your business as well. How much will you be willing to pay before you crumble under the weight of attorney’s fees? This is why your business needs insurance. If you have a physical location, you need general liability insurance. General liability insurance protects you from several types of claims that can arise based upon your business operations. This includes personal injury (someone slips and falls in your place of business) and property damage (fire or theft). Most landlords will require that you have such insurance to protect them from your client’s potential claims. If your landlord does not require this, you should make efforts to obtain it. If you work out of your home and have clients enter, your homeowners insurance may not be sufficient to cover any claims. You need to make sure that your insurance covers your business endeavors or obtain separate insurance which does exactly that. This is especially true if you keep inventory in your home. If there is a fire, your inventory may not be covered by your homeowners insurance. If you deliver professional services, you need Errors and Omissions insurance. Errors and Omission (E & O) Insurance protect individuals and businesses from negligence claims. This is important insurance to have if you are a service provider. Coaches, consultants and designers should ensure that they have this type of insure. Anyone whose business requires a license may have to maintain this type of insurance as a part of their profession. If you are not required to do so, this should be an important part of your business. If a client feels that you provided them bad advice or acted in an inappropriate manner, this insurance can protect you and your business. This type of insurance will protect you against costly legal fees and damages if you are sued. It also protects against complaints to your licensing agency. Because of the nature of the claims that may be presented, E & O insurance tends to be costly. However, the cost of potential liability far outweighs the yearly premiums. You do not want to be caught without this type of insurance. If you manufacture or sell physical products, you need Product Liability Insurance. One type of insurance that is often overlooked is product liability. This type of insurance protects against injury or damage caused by products sold or supplied by your business. You may think that your business does not do anything that could cause injury or damage. Consider a natural soap maker that develops soap that causes an allergic reaction or severe skin rash. Or, a caterer whose food makes people ill. Both of these examples can be claimed under product liability. You should obtain this type of insurance as soon as you begin providing the product to the public. Even if you are in the process of giving the property away during its testing phase, you should have product liability insurance. Yes, you can have waivers; but waivers may not always apply and is dependent upon the type of damage that may occur. If after reading this you still think that you have nothing to lose, think again. Do you really want to close your business because you have been sued and cannot afford to pay for damages? It is not as easy as you think to simply close a business and start over. In certain circumstances, you can be sued individually even if you have formed an LLC or Corporation. Do not take chances with your business. Protect it and yourself and ensure that you obtain the proper type of insurance coverage. |
AuthorShahara Wright is an experienced and highly sought after business law attorney and business strategist. She is the author of From Entrepreneur to CEO and host of the CEO Collaboration Circle. Shahara founded The CEO Effect, LLC to work with small business owners who want to implement strategy to build capacity. 
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