As a business owner, it's terrifying to think of all the things that could go wrong. And while there's no way of completely avoiding them, there are some things you can do to protect yourself, and your money.
This isn't something that’s discussed particularly often, especially in the entrepreneur success stories, because, well, it isn’t very glamorous. But hey - getting sued and losing all your money ain’t glam either!
Insurance is a must-have for pretty much every business, and there are a few different types, some which will be relevant to you and some which won’t.
If you offer services, make sure you have professional indemnity insurance in case your services result in someone's business losing money or being damaged.
Public and product liability insurance are essential for product-based businesses, and protect you if someone is injured or gets ill from using your product.
If you employ any staff you’ll need employer’s liability insurance, and you’ll definitely want insurance to cover your stock, workspace and anything you need to do your job. You can also get business interruption insurance to cover financial losses and get you back on track if something happens which stops you from trading, for example, if your stock gets damaged.
You'll also want to make sure that anything you rely on to do business - like your computer and phone - are also insured.
I used a website called Simply Business (affiliate link) when purchasing my business insurance because their website allowed me to completely tailor my insurance to my own needs as a business owner which made the whole process a lot easier than I thought it would be.
Make sure you're complying with regulations
We all know about the GDPR, but there are often regulations you need to follow and organisations you need to register with to make sure your business is operating legally.
If you're a member of any professional bodies, you'll probably need to let them know that you're running your own business and make sure you're complying with their rules, and if you process anyone's personal data, you'll need to register with the Information Commissioner's Office.
And of course, you'll need to let HMRC know that you're self-employed if you haven't already.
Always use a contract
Contracts are so important for service-based businesses as they protect both you and your clients, as well as providing details of your payment terms should they conveniently forget to pay you on time.
They confirm the expectations for both parties (i.e. the services you’ll provide, when you’ll finish, how much and when you’ll be paid) very clear to avoid any potential disputes. They also serve as evidence of what has been agreed, so make sure you have one for every client in case something goes wrong.
Keep your business records organised
Keeping your records up to date is essential for every business owner. Make sure you keep records of all the invoices you send, receipts for business purchases and bank and credit card statements to back them up, and make sure they’re in a safe place.
You should also keep track of your invoices that you’re waiting to be paid for, any bills you need to pay and set aside time to do your bookkeeping and update your records on a regular basis to avoid it building up.
Staying organised with these things will help you manage your money and cash flow because you’ll be more aware of what’s coming in and going out. It will also make filing your tax return way easier.
When you know you've done everything you can to protect yourself and your business, you'll feel much calmer and in control. What steps have you taken to protect yourself as a business owner?
I'm a financial coach helping female business owners to gain the knowledge and confidence they need to manage their finances successfully and have a positive relationship with money. If you're ready to take control of your finances, click below to find out how I can help you.
I also create courses and resources to help female entrepreneurs manage their business finances.