5 Ways to Financially Protect Your Small Business

Accidents, calamities, or struggles with revenues and expenses can financially derail your small business. Protection of your business finances begins before you even open the office, store or plant. Here are some ways you can keep your business financially viable.

Guard the Name

Effective branding brings name recognition to your goods, services and business overall. When another business—especially a competitor—appropriates your name or logo, you risk losing customers and even standing if the competitor’s wares are of poor quality. Protect your names and logos by registering them with the U.S. Patent and Trademark Office. A registered trademark affords you the right to right to stop others from using the names, symbols and logos that define your brand. If you do intend to do business locally or within a single state, you may need only register your business name or trade name with the state business registration office.

Handle Potential Liability Claims

Personal injury claims and judgments by injured customers, visitors or workers can cripple your enterprise financially. A slip and fall injury attorney may resort to commercial liability insurance to seek compensation for someone injured on your premises because of slippery floors from spilled liquids or insecure railing or surfaces. Liability policies also cover operators of your business fleet or vehicles whose negligence subjects your business to vicarious liability. Employees injured while on the job are entitled to workers’ compensation benefits, regardless whether you were at fault in causing the harm. Your business must carry workers’ compensation insurance if you have a certain number of regular employees.

Insure the Premises and the Income Stream

Two California wildfires in July 2018 claimed 329 business, along with 800 private and commercially-owned vehicles. Businesses in hurricane-prone areas face risks of total losses of structures from flooding or winds. Restaurants, industrial facilities and businesses that store flammables encounter greater chances of explosions and fires. With business property insurance, you have the ability to rebuild or replace lost buildings, equipment, inventory and supplies. Business interruption pays lost revenues should a disaster force you out of your store or shop.

Build Good Business Credit

Strong credit scores can help your business get insurance at low premiums and loans with low interest rates. The value of good business credit extends also to attracting vendors and investors confident in your ability to repay obligations and generate revenues. Achieving a high business credit score means paying debts on time and having that history reflected on business credit reports. Dun & Bradstreet, Equifax, and Experian maintain business credit histories. Consider doing business with vendors, lenders and other companies that report to a business credit reporting agency. You may also build business credit by organizing as a limited liability company or corporation and having an Employer Identification Number or Tax Identification Number. Business credit scorers are less likely to consider your personal credit history when they don’t track with your individual Social Security Number.

Watch for Cyber Breaches

Cybercrimes, including theft of customer and business data, malware, viruses, and other breaches, inflicted total losses in the billions. For your small business, a cyber-attack can cripple ability to place or complete orders, communicate, and maintain the confidence of customers. Identity thieves may target your customers’ credit card, debit card, and financial information. Information security professionals can install measures such as firewalls, antivirus applications, encryption, computer data backups, and controls on access to computers and networks. Avoid conducting business on open Wi-Fi networks and change passwords periodically.

For your enterprise, financial stability means anticipating the risks of injuries to employees and patrons, losses to your assets and maintaining the ability to access funding. Insurance, information security practices and sound business operations can help you accomplish these goals.