How to reduce your risk as a business owner


As business owners, we sure do have a lot on our plates. Balancing the day-to-day of running a business with high-level strategic and growth activities can be enough of a challenge by itself. However, things can go completely off kilter if something goes wrong, and you don’t have the proper protections in place.

A dispute or issue can turn things upside down very quickly, so it pays dividends to ensure you’re taking a number of precautions to mitigate your own risk. Below are five simple tips for ensuring your business is covered.

1. Choose your insurances

The need for business insurances can’t be stressed enough. But when it comes to choosing the most appropriate options for you, there are the “must haves” for any business owner, and there are those that are a little more specific to your field.

Professional liability insurance is the number one “must have”. Property insurance should be purchased if you own your work residence, workers’ compensation insurance should be purchased the moment you employ someone, vehicle insurance if you have company cars, and product liability insurance is great if you sell, well, products. These are all fairly intuitive.

You should then consider your industry. As an example, if you’re a tradie who works outdoors, public liability insurance may be key. If you provide advice of any nature, professional indemnity insurance would be the way to go.

Case in point: A client who is an electrician was protected when a shopper tripped on a cable that protruded from works he was performing at a busy mall. He was just doing his job, but the shopper still broke her ankle and wanted her medical bills paid for – which they were, through the electrician’s insurer. Without public liability insurance, he could’ve potentially been out of pocket many thousands of dollars.

2. Take advantage of industry bodies

One of the most useful steps a professional service provider can do to mitigate risk is to join an industry association – as a financial advisor, we turn to the Association of Financial Advisors. Industry associations help protect their members by providing guidelines, education, templates, tips and advice based on extensive experience and expertise in the field.

Case in point: In the financial services industry, self-employed financial planners often rely heavily on our industry bodies, the Association of Financial Advisers and the Financial Planning Association of Australia, to liaise with government bodies on areas of concern. This has been invaluable considering the amount of attention financial services has been under to ensure regulatory compliance.

3. Don’t forget the government

The Australian Government itself is a fantastic resource for small business. Government resources can assist you in understanding relevant laws, such as The Corporations Act 2001. They can also help you in the case of claims with dispute resolution services. Staying up-to-date with the latest resources will keep you informed about any updates to legislation and services that may directly impact or help you.

Case in point: We once directed an SME owner who was owed $5,000 by a client towards the NSW Local Court for small claims. The client was compelled to pay upon receiving a notice from the court, meaning the SME owner wasn’t left out of pocket for either the invoice, or any legal bills.

4. Get everything in black and white

It’s always prudent to get as much as possible in writing, such as agreements, contracts, requests, promises, and services rendered. This ensures full transparency for everyone involved, avoids miscommunication, and prevents any problematic “he said she said” situations.

Case in point: Even emails can do the trick – not everything has to be a fancy contract. This is often more about ensuring expectations are clear, as opposed to preparing for an extravagant legal battle. (But it always pays to be legally covered also, of course!)

5. Leave nothing to the imagination

Building upon the previous point, it’s crucial to be completely forthcoming regarding the exact service that you provide for clients. This means there will be no assumptions about what you do and, more importantly, what you don’t do, reducing any confusion on the part of both parties. And very importantly – don’t be tempted to overpromise just to win a client! You’ll definitely regret it if you can’t deliver.

Case in point: Over-delivering can be as detrimental to your business as under-delivering, if you are misdirecting scarce resources. If a client is pushing you to deliver more because expectations weren’t clear from the outset, you may punish your more patient clients by putting them as a second priority just to please the first client. This may potentially work in the very short term… but certainly isn’t a sustainable long term solution for you, or your business.


About the author

Katrina Haskew is Managing Director of Leading Advice, a family-run financial advisory firm that helps its clients and their families build and protect their wealth, now and into the future. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice and consider a Product Disclosure Statement. The views expressed in this publication are solely those of the author and cannot be reproduced in any form without her express written consent.