SUCCESS IN 2013: KNOW YOUR BUSINESS

Three Key Areas that Need your Attention

Owning a small business and living in the land of “entrepreneurial bliss” can prove rewarding, yet challenging.  Lisa J. Vogler, an attorney with the law firm of Cummings, McClorey, Davis & Acho has counseled many small business owners, and has advised them of three areas of their business that need constant attention: insurance, accounting and marketing.  These areas should not be delegated to an employee or independent professional without the owner’s consistent oversight.  Being educated, informed and pro-active in these areas can protect the owner, the business and its future success.

INSURANCE

Commercial insurance is a topic that perplexes many entrepreneurs.  The tendency is to view purchasing commercial insurance in the same way as insuring a personal vehicle; however, this is not the case. 

 

Commercial insurance needs to be customized to fit the needs of a specific business, which can be challenging to determine.  General liability, workers’ compensation, equipment coverage, commercial auto/fleet coverage, fiduciary or dishonesty bonds, and umbrella coverage are just a few of the types of policies that may be applicable to a small business.  Residential and commercial contractors have the added concern of understanding the laws in regard to ownership of job materials, and the need for builders risk coverage.  

Additionally, business owners should understand how warranty laws affect the operation of their business.  If their business involves a product or service that is covered by an express or implied warranty, owners should know if general liability coverage will protect them if a claim is made.  

It is important for business owners to use a trustworthy and attentive insurance professional.  It is equally as important for business owners to understand how their policy premium is calculated, and how deductibles can affect their premiums and potential cash flow.  Business owners should meet with their agent, at a minimum, twice per year and inform their agent if any aspect of their business has changed.

ACCOUNTING
Small businesses and professional offices can be havens for embezzlers.  Not paying attention to a businesses’ checkbook and finances can have devastating consequences.  Business owners should always compare the computerized accounting program with hard copies, such as check stubs, bank deposit receipts and invoices.  Furthermore, they should never sign a blank check, even for a long-time trusted employee, and should never allow only one employee to know the accounting program’s password. 

 

Understanding the payroll tax obligations is also a concern in managing a small business.  Failing to budget for weekly, monthly or quarterly payment of payroll taxes can be costly.  All too often, small business owners prioritize other expenses over payment of payroll taxes, allowing arrearage, penalties and interest to accumulate.  

Finally, business owners should never hesitate to structure their written contracts or verbal obligations with a customer in staggered or installment payments.  If a product order requires materials to be purchased or requires set-up time, ask for a reasonable deposit or an initial payment from a customer to cover these expenses.  One of my favorite general rules in business is, “You don’t get what you don’t ask for.” 

MARKETING
In Lisa’s experience, there is one essential approach to small business marketing: always sell yourself first.  Despite the technology of today, people still want to see a business owner’s smile and shake their hand.  If a customer does not believe or trust a person, the chances of selling them a product or service diminish exponentially.  

It is also imperative for business owners to know their audience.  Research a prospective business or individual before making that first phone call or setting up that first meeting.  Discover what is important to them, and impress them with the knowledge of their business history and philosophy.   

The year ahead holds promise for many small businesses.  Business owners should get out there, flash their smile and shake some hands, but when you get back in the office. . . . know your business.  

Lisa J. Vogler practices in the areas of municipal law, construction law, insurance defense, and commercial and personal injury litigation. As an entrepreneur and general counsel for a family business, she has extensive background and experience in all issues related to business, including employment law, risk management, contract drafting, review and negotiation, and business taxation.  She can be reached at (231) 922-1888 or lvogler@cmda-law.com.