Protecting Yourself Throughout Large Business Investments
Most business owners know that a certain amount of risk is something we have to tolerate (or in some cases, chase) in order to keep progressing within our industry. Risk is often a good indicator that fertile ground is ready to be seeded, with potential results blooming in the future.
That said, risk is risky based on the fact that it might not work out. For instance, when a new company stakes its entire claim on bringing out a new product line, a failure can sometimes cause the business itself to spend many years clawing for survival instead of thriving as they had planned. For this reason, it’s important to make sure we minimize our risk as much as possible without stifling progress.
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This is especially important when investing in large projects or attempting to put a good deal of your business capital towards an outcome that might not be guaranteed otherwise. Learning to manage risk either side of this, especially if the outcome of a given situation could define your future, is essential. In this post, we’ll discuss how to best approach that from a financial and legal perspective.
Consult with a financial advisor and an insurance agent regarding the decisions discussed here.
Insurance
Of course, insurance is the key to most financial cover. Yet insurance can take many forms. Making sure that your drivers have full liabilities insurance, for instance, can help you protect your firm should an accident take place, ensuring the right people are compensated.
Insurance can also protect against valuable assets in case they’re damage, lost or stolen. In some cases, specific insurances may be required, such as catering insurance. Make sure that you have both the legally required and optionally preferable insurances clearly listed and your policies updated as you negotiate them year on year. It could protect your business from going under.
Bonds
A commercial bond is an agreement that protects businesses. This kind of surety can ensure that you’re protected against fraud, monetary loss, misrepresentation, and more. You can also achieve bonds like performance bonds, where construction work must be completed as quoted or else the finances for alternate contractors are extracted.
An approach like this can make a tremendous difference in ensuring your projects and deals are sustained in the long term.
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Vet Contractors/Suppliers
Vetting suppliers or contractors is essential in many lines of work, but it’s essential if you’re making sure to place a large order or you’ve planned a large project. What are the testimonials and past reviews like? Have they come recommended by a trusted source? What are their policies and have they given you a full list of their terms so you don’t have to pay a dime until you see the contract in full and sign it, with both copies properly registered?
Contractors and suppliers may be fantastic, but it’s up to you to verify that before you get started. Doing so can help you avoid losing out on large investments.
With this advice, you’re certain to protect your business even through large investments and long term projects.
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies