And these startups do not have to face these risks
Most startups begin working under a tight budget. Because of budget constraints, it is tempting for business owners to skimp on many important aspects of the business. Commercial Insurance is one aspect that is commonly left until the budget has been depleted by other aspects of getting the business off the ground. General Liability and Workers Compensation are required by law for most businesses in most states and that is where most business owners start, but far too many startups do not get other necessary coverages. Here are five aspects of starting a business that are far too frequently neglected.
Not Understanding Regulations
One of the first mistake a lot of startups make is not understanding and not prioritizing compliance with local, state, and federal regulations. The days when a startup could worry about regulations as they grow their business are a thing of the past. Entrepreneurs now need to have a policy strategy in place from the get-go. There are organizations out there that specialize in just this aspect of getting a business off the ground. Enlisting the advice of other experienced entrepreneurs is a wise decision as well.
Hiring and Firing without an HR Expert
Many startups are started by a person who is an expert in whatever industry the business operates, but they may or may not have experience owning and operating a business. This can be tricky when it comes to hiring and firing employees. There are many laws in place that are different depending upon the state you operate. One slip up can have drastic implications if your business faces an employment related lawsuit. For this reason, it is extremely important to consult with, contract out, or hire internally an experienced Human Resources Professional to guide you through the process of hiring and firing employees.
Not Securing enough Insurance for startups
Far too frequently small businesses and startups work within a very tight budget. Because of this fact, it is tempting for a business owner to forego many types of insurance. Especially those types of insurance that are not required by law, but the coverages that are required by law are really just the bare bones packages that a business can survive with. The keyword in that sentence is survive. That means they can continue to operate legally in most states with only General Liability and Workers Compensation Insurance. In almost all instances, businesses are taking an enormous risk if these are the only policies they secure. The best way to determine what types of insurance policies you do and do not need is to partner with an independent insurance agent with whom you trust. Once you find an independent agent you trust it is equally important to speak long and honestly with them about all aspects of your business. If you do this, they should be able to come up with multiple packages at multiple price points to satisfy the needs of your business.
Not focusing on Culture during Hiring
Far too often during the hiring process, managers focus on the best candidate and not on the best fit. Many times fit is the most important aspect of any hiring decision. Just like operating a team, people have to spend a lot of time with the people they work with. In many situations you are spending more time with your coworkers than you do with your friends and family. Interacting with people who can tolerate each other and who can push each other to higher levels is important for any successful business.
Not Firing a Bad Apple as Startups are Getting off the Ground
Firing people is never easy. Especially when the longer an employee has been with the company, but the quicker you remove a bad apple the better it is for your business. Once you and your management team have determined that someone is causing problems with the entire staff, it is best to address the situation quickly and if the behavior does not change you need to fire the employee. It is always important to consult with your advisers and your human resources professional, but in most cases it is better to fire the bad apple quickly before they have too much of an impact on your company culture.