Keeping your business safe – Part 1

The high wire

Most small businesses rely heavily on the boss. That’s you and I. We may have great managers upon whom we can rely when we are away, but sooner or later, we have to be available to make decisions about the big issues.

However, accidents will happen, and therefore we need insurance, whether it is the sort for which we pay premiums, or our insurance is a common sense approach.

Safety nets

One of the hazards of running a small business (or should I say “challenges”) is when we are offered a really good project which is far too large or complex for us to do. It is beyond our current capabilities. We need to assess the risk to our business in taking that source of business on:

  • Can we do it comfortably by engaging another business as a partner, assuming that is acceptable to the client?
  • Is our insurance cover enough if the project goes wrong or if the client thinks it has? (We need to be covered for wrongful claims too).
  • Can we cope with the stress?

If we can say “yes”” to all those questions, then go for it, because it will be an exciting development and something to talk about in pushing our business forward.

If our answer is “no” to any one of those questions, then we can decline politely and respectfully, and still have the opportunity to make a great referral to a bigger business who may reward us then or later.

It is wonderful to get an exciting new client, but it is honourable and sensible to decline when we know we just cannot meet client expectations.

Have you ever bitten off more than you could chew?

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Getting out of our depth in business


Modern version of stitching yourself up

A raging storm

As I write this there has been a furore about certain wealthy or high-earning celebrities who have been involved in tax avoidance schemes in the UK. The furore is because of anger that these rich and successful people are seen to be paying to the Government less than their “fair share” in tax, whatever that is. I am not going to debate the subject here.

As you know, I work in tax. What this row has brought to the surface is that there are a number of promoters of tax schemes, and many of these are just “front-men” or “front-women” if there is such an expression. In other words, whether qualified financial advisers or not, they are first and foremost sales people encouraging people to buy into these schemes.

Gullibility and greed

I have read the websites of some of these people, and I assume they wrote their own copy or at least approved it. What terrifies me is that there are often serious inaccuracies in what they say, either because they are setting out to mislead or (much more likely) that they do not understand how these schemes work and they believe everything they have been told by the direct introducers and the devisers of these schemes.

This means that as business or financial advisers, they do not appreciate that these schemes are risky not only to the clients but to themselves. They are only interested in a fat commission, like the cartoon characters with cash-register eyes.

Compensation culture

Now if the woman or man in the street were sold any sort of financial arrangement which did not work or caused them some financial embarrassment, they would consider looking for compensation. A very wealthy or high earning person would look for a lot of compensation. From whom might they look for that compensation? Why, from the person who first introduced them to the scheme.

Even if the scheme promoters and devisers were to take responsibility ultimately, there would still be the heartache for the “front-person”, the embarrassment and yes, once again, damage to the person’s reputation.

Within the tram-lines

Now, I am very good at what I do. That is because I make sure I understand everything about it. I keep myself up-to-date with my CPD. However, I am not an expert in everything. In fact I am not an expert in many business skills, or even in some aspects of tax, which is why I know when to refer a project to someone else. I try to be a business good connector, but I keep out of the loop.

If we involve ourselves in business matters we don’t understand fully, at the very least we make fools of ourselves. At worst we can get sued for a lot of money, and if we have strayed from our comfort area we may not even be covered by our insurance.

It cannot be worth anyone putting at risk the roof over their heads for a reckless business decision. I wouldn’t do it. Nor should you.

Getting out of our depth in business

My sort of swimming pool

I am not a great swimmer. I can manage quite well in reasonably calm water, but I don’t like to get out of my depth unless in a swimming pool with a lifeguard watching on.

In business I try to stick to what I know. I know a lot about tax. I know a lot about running a business. After all I have been running several for quite a long time. I cannot claim to be a specialist in every business skill or indeed in very many. In business advice I am rather like the family doctor. I can make simple diagnoses and prescribe treatment, but anything complicated I refer to a specialist. That is what my business advisory offerings are about: understanding the needs of a business and finding the right person or people to satisfy that need and help the business grow.

We can’t do everything ourselves.  That is why I subcontract non-tax work out from my tax business because I cannot keep up with the latest requirements in the accountancy world, and it is not cost-effective to do bookkeeping. I specialise and am good at what I do. I don’t want to be a Jack of All Trades and Master of None.

It is a big risk to try to do something for which you lack the expertise. You can get things wrong as a financial adviser did recently doing the tax return of a client I have just acquired. The risk can be a quite serious financial one whether it is about money matters such as tax or driving a fork-lift truck you are not trained for. Worst of all, if something does go wrong you and even if you are insured for public or professional liability, your insurers might not pay up if the mishap occurred while you were doing something you shouldn’t have been doing. You might lose the business and even your house when you get sued.

Just occasionally I have been offered business which was potentially well within my expertise but the financial risk was to great simply because of the size of the businesses and the large amounts of money involved. It has pained me to do so but I have passed that business on to larger firms with bigger insurance policies and which I believe will do a good job, though perhaps for a commission.

It is easy to be tempted to get out of our depth by a large fee or just by a desire to be help. We don’t want to find ourselves drowning though, do we? Have you ever bitten off more than you can chew?

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