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Setting up a startup is something many people want to do. They have a great idea, and ideally, they have tested it out to ensure it’s viable before they start. And then, they have some thoughts about how they might market their business, who their target market is and their ultimate goals.
This all sounds great, especially since starting a business is no longer so difficult and many barriers, including cost, have been removed in a lot of cases. However, running a startup is still not easy, and it’s wise to understand the kinds of challenges that might come your way as a new business owner. One thing you’ll need to consider that you might not have thought about so far is how to protect your startup.
The truth is there are any number of potential threats that could cause a problem, and you’ll need to know what they are and how to deal with them. Here are four areas that if you don’t cover them correctly, could become potential traps down the road:
1. Register your ideas
Something that can help a lot when it comes to protecting your startup is ensuring you register your ideas. Protecting your intellectual property (IP) is something that can really help you, especially when it comes to ensuring you stand out and don’t have issues with competitors or ‘copy-cat’ businesses.
Related: 7 Persistent Myths About Intellectual Property
IP is anything you have thought of; it’s your ideas, in other words. This can incorporate all kinds of different things, such as trademarks, copyrights and patents. Take a look around your business — physically and mentally. See what ideas you have that could benefit from being protected in this formal way. What is it that distinguishes your brand? Could any of that be copied? If so, you must protect it, and that will, in turn, protect your business.
Something that is a very real threat to all businesses, including startups, is cybersecurity. A hacker or cybercriminal can gain access to your network and wreak all kinds of havoc. This includes stealing sensitive information or deleting files. Cybercrime can destroy businesses and ruin reputations in an instant.
You might assume that hackers will only be interested in larger corporations where they can cause a lot of problems and steal a lot more, including money. But, the truth is that it is startups where these criminals have the most success. That’s because larger businesses will have put plenty of cybersecurity measures in place. Smaller businesses, startups in particular, maybe won’t have. They won’t have thought about it or might not have budgeted for it.
More: 5 Ways to Protect Your Company From Cybercrime
This can obviously be hugely problematic, but there is a solution; cyber awareness training. Cyber awareness training teaches you how to put measures in place to make it much less likely that this will happen. This might include information about firewalls and antivirus software, how to choose good passwords, and how to ensure your team is aware of good cybersecurity.
3. Get insurance
Anything can happen when you run a business. Although you hope those things are good, sometimes they will be bad. This could be because of a mistake or accident. But, it could still lead to problems, and some of those problems could be potentially serious ones. This is why insurance is such a good idea. Additionally, why, if you want to protect your startup, having the right insurance is essential.
Related: 7 Types of Insurance You Need to Protect Your Business
Before you can buy insurance for your business, you’re going to need to assess exactly what kind of insurance you need, and how much cover you want. Having the wrong insurance will clearly be unhelpful, but having the wrong amount of coverage is just as bad. Too much coverage, and you’ll be paying a lot more than you need to, which can be a real problem when you’re just starting out in business. On the other end, paying too little might make you not completely covered if and when you need to claim for something.
Once you know what it is you need, whether it’s vehicle insurance, public liability insurance, buildings, and contents insurance, or something more specifically linked to your particular industry and business, you can speak to insurance providers to determine who will help you the most and give you the best cover for the best price. Remember, although you’ll want to save money as a startup, there are some things you’ll need to spend more on. Insurance could be one of those things — don’t buy cheap if it’s not actually going to help you.
One final note about insurance is that you must also regularly review what you have. It could be that things within your business have changed. That might mean you have to update your insurance as well.
4. Draft good contracts
Even if you are the only person actually working in your business, you’ll still be working with others. These might be suppliers, clients, or perhaps mentors and investors. No matter who they are, even if they are friends or family, drafting good, legally strong contracts before you start working with anyone is wise. Of course, this is a must if and when you employ someone, and that’s likely to be something you already know. But as we’ve noted above, this is not the only time you might need a contract.
Related: How to Draft an Effective Founders’ Agreement
A good contract will state what each party is expected to do and not do. It’s a great way of ensuring everyone is working for the same goal, and it means you have legal recourse if the contract is broken, especially if your business is damaged in some way. Without a contract, if something were to go wrong, you might find it hard to get legal help, and it could be that your business can no longer operate. Ideally, you’ll never have to get this help, but having good contracts is a useful safety net all the same.
