You shouldn’t operate dangerous equipment without suitable PPE and likewise, you shouldn’t operate a business with out suitable risk protection as well.
Being in business brings with it a level of [business] risk, and the construction industry is about as risky as it gets. The failure rate for construction businesses is only exceeded by the hospitality industry, but this is one statistic where being near the top is not a good place to be. So what can you do to build a protective shield around yourself as a business owner against things going wrong. Here are 5 quick tips:
- Have a solid contract or Terms of Trade with your customer. It is better to negotiate strong terms at the start, rather than going legal when the client isn’t paying what they should, when they should.
- Make sure your business entity is a Limited Liability Company structure. The term “limited liability” is just that. It limits your liability to what you have invested in the business and not your personal assets (in most cases) The only time where your personal assets may be at risk is when you have been trading recklessly.
- While on the topic of personal assets, make sure they are in a family trust. This puts them in an even more protected situation. It is relatively easy to do, but must be done properly, by a good lawyer. It pays to review your trust from time to time also and make sure it is well managed and robust.
- Avoid giving personal guarantees. Hard one I know when you are opening an account with a merchant, but try crossing the clause out and see if you can get it past the credit controller. Or agree to only a low level of guarantee.
- Take out the proper insurances. I know insurance is expensive…..until you need it. Then it seems really cheap. Get alongside a good broker who understands the trades and make sure you have the best mix of policies for your situation, at the best price possible.
There are lots of other things you should do in business to protect yourself, but the five things above are a good start. If you need a referral to a good lawyer or a good insurance broker, contact me HERE and I will put you in touch with people I know and trust.
Take care out there.
Andy Burrows – The Trades Coach