Top 3
(Easily Avoidable)
Business Risks
1. Unwittingly leaving personal assets (house, cars,
bank accounts) open to business lawsuits
A great benefit for business owners is that they are allowed to separate their personal assets from their business assets - this eliminates the risk of exposing personal assets to business problems. This is the best insurance policy in the world, and many business owners fail to take advantage of this easy and low-cost tool.
The solution is to form either an LLC or a corporation, and then follow through with the essential remaining steps (hint: there's more to it than just filing the Articles with the State of Oregon).
2. Failing to have effective written contracts
When should a business have a written contract for its customers, clients, employees, independent contractors, etc.? When there is more at stake than the business can afford to lose. Written contracts ensure the business is paid, protects customer lists and other confidential information, etc. They can also deter others from filing a lawsuit against the business.
While many business owners attempt to write their own contracts, these documents rarely hold up in a lawsuit when the business needs them to.
3. Waiting until a lawsuit is filed to hire a business lawyer
Many business owners decide that it is too expensive to hire a lawyer or CPA. What these owners do not realize is that the cost of preventing serious legal consequences is minimal compared to waiting until the worst possible time when legal fees, damage awards, interest, and penalties are excessive enough to shut the business down (which happens A LOT).
As they say - the best entrepreneurs are those who know when to delegate.