Small businesses are the lifeblood of UK society and economy.
They account for 99% of all businesses, employ more than half the private sector workforce, and generate almost half of all new jobs.
However, small businesses are also one of the riskiest forms of a business venture.
Nearly a third of all small businesses fail within their first five years of operation.
This is due to many small businesses not considering how to protect themselves against potential risks when starting their business.
Thankfully, there are several safeguards that every small business should consider before launching their new venture.
Protect your intellectual property
Start-ups and small businesses often fail due to the lack of intellectual property protection.
Business owners that don’t take the necessary steps to protect their creative ideas or branding can find themselves with little or no recourse.
With the growth of the internet and social media, it is not uncommon for businesses to use others’ ideas without permission.
Many large brands have been accused of copying or “lifting” ideas from smaller companies.
Unfortunately, smaller companies can be crushed by the legal proceedings of more powerful firms.
Before starting your new business venture, ensure you have a legally binding contract that has been drawn up in conjunction with corporate lawyers such as Beyond Law Group Solicitors and take out the proper intellectual property protection for your creative ideas.
Ensure you are adequately insured
Businesses are expected to be adequately insured against several common risks.
Although there is no standard requirement for SMEs to purchase business insurance, there are several reasons why it makes sense for most businesses to do so.
Among the most important are that insurance can help limit your financial risk, protect your business against lawsuits, provide a safety net in the event of an injury, and provide financial support during times of crisis such as natural disasters.
Protect Against Cyber Security
Cyber security is a growing concern for businesses across all sectors.
Small businesses that fail to protect their data and systems adequately are more likely to suffer a cyber attack.
According to one report, approximately 80% of small and medium-sized businesses are likely to suffer a cyber-attack or data breach.
Because the financial cost of a cyber attack is often so high, companies often focus on protecting themselves against attacks rather than preventing one in the first place.
Unfortunately, this approach is short-sighted and can result in cyber attacks having a more significant impact on the business.
GDPR Compliance
The General Data Protection Regulation (GDPR) is a set of data standards that apply to all businesses operating within the EU.
The GDPR is designed to protect the data and privacy of EU citizens and applies to any company that holds or processes the data of EU citizens.
Most businesses dealing with EU citizens or storing their data must comply with the GDPR.
If your small business does not comply, you could face steep financial penalties and damage your reputation.
To comply with GDPR, you must conduct a detailed analysis of your data-processing procedures and implement the appropriate safeguards.
If you fail to do so, you could be hit with fines of up to €20 million or 4% of your annual revenue, whichever is greater.
Employee and Employer Rights
Employers are required to provide certain types of information to employees.
This includes information about their employment terms, working hours, and vacation entitlements.
Employers must also offer employees a written contract specifying their terms of employment.
This contract must also include information about the amount of paid time, sick pay, and any other benefits or entitlements an employee is entitled to.
In addition to these safeguards, employees have several other rights, such as the right to privacy, the right to take time off for various reasons, and the right to a safe working environment.
Conclusion
SMEs face several unique challenges when starting or running their business.
They must consider how to protect themselves from the risks and threats in their industry.
Fortunately, there are several safeguards that SMEs can adopt to help protect themselves against these risks.
