Most business owners are buried with daily operational needs, and taking time for disaster prevention is tough. Mishaps are bound to happen, and the more prepared you are, the less painful they will be.

Most business owners are buried with daily operational needs, and taking time for disaster prevention is tough. Mishaps are bound to happen, and the more prepared you are, the less painful they will be. While not an all-encompassing list, hopefully the following checklist will prove helpful.

Employee Theft

I grew up in a safe, semi-rural environment, and my best friend’s family never locked their door. I asked his father why, and he smirked that locks would not keep thieves out of the house if they really wanted something. I shared this with my dad, and he replied that locks were to help keep honest people honest and from making mistakes where everyone loses. Some common sense steps for preventing theft include:

• Try to have more than one person in the office handle finances.
• Have checking statements mailed to your house and review them.
• Have an embezzlement rider on your insurance policy.
• Put safeguards in place for electronic banking such as debit cards, credit cards, etc.
• Be on the lookout for employees with personal issues that can create financial stress, such as children of employees with medical or legal issues. Sudden behavior changes could be related to drug use, gambling problems, etc.
• Have a clear policy regarding employees doing side work or accepting cash for a change order from a customer.
• Be an active supervisor or make sure your managers are. Well-supervised employees are less likely to steal.
• Don’t flaunt your wealth and success.
• Run background checks and conduct drug tests. Try not to hire a thief. Call previous employer references to make sure they are legitimate.

Insurance

Insurance is an ever-growing expense and a necessary evil. However, it’s too late to discover that you are not covered when a mishap occurs. Realize that insurance companies are the world’s greatest statisticians. They bet the odds on what is likely to happen, so if you pay more for insurance, it is because the risk is greater - which means your need is greater.

• Focus on coverage and needs first, then worry about the price. Make sure you have an agent who is familiar with your industry needs and is a practitioner, not just a salesperson. Make sure the agent understands all the little odd things that can go wrong and checks your coverage. Also, as your business changes, your coverage needs change.
• Remember, insurance is for disasters; it’s not a slush fund to pay for little mishaps. If the costs are too high, you need to manage costs, and still make sure you have adequate disaster coverage.
• Educate your employees. Many think workers’ comp is a government benefit and do not understand that increased costs impact profits, which ultimately impacts their livelihood. Make sure they understand the overwhelming cost of hospitalization and that it is a social issue and not a matter of the boss being cheap.
• Have your insurance company inspect your organization for risks and offer advice.
• Keep your incorporation and legal documentation in order. If you have a huge multi-million dollar problem, one alternative is to close the company, start over and protect your personal assets.
• Video or photograph your office and keep those records off the premises so you have a visual record of what you own and can more easily list it for insurance recovery.

Professional Advisers

Lawyers, accountants, insurance agents, financial planners and consultants are all professionals whose advice is much cheaper when planning for what might happen versus getting out trouble. “What if” advice is always cheaper than, “Oh no, I am in trouble, now what do I do?” They will not all give you the same advice, so you need to weigh what each tells you. Don’t be afraid to ask questions about what you do or do not understand. Be wary of advisers such as “life insurance” agents who pose as financial planners and receive commissions on what they sell.

If you are in a family business or partnership, make sure you have clear disability, death and buyout plans. Nothing is perfect, and this is difficult stuff to figure out, but some plan is better than no plan. You don’t want lawyers, the state, the IRS, banks and others forcing an issue. If you have an elderly parent, don’t be afraid to make sure they have a will, and understand their wishes. Waiting until they are incompetent and then dealing with it can be an ugly process. I’m always amazed when I ask 50-year-old sons who took over their father’s business what will happen to it when he dies, and they don’t know.

Key Employees

As your business grows, key employees drive much of your success. Managing, developing and keeping such key employee participants intact are obviously important.

• Don’t create a sense of entitlement. If you have underpaid a key person and they think you owe them something, or you have made unclear promises, this can create real problems. The longer this unspoken employment contract stays in place, the harder it will be to correct.
• If key employees are going to retire in three to five years, you need to talk with them and begin to build a replacement strategy. This can be tough, but failure to do so will lead to disaster. Don’t be surprised if this never occurred to them. If that key employee manages sales contacts, make sure you have access to their records and a way to follow up that effort. Also, remember that as they age, their contacts may be aging, and they may fail to establish relationships with up-and-coming leaders within your customers’ organizations.
• If a key employee is in a sales situation, make sure you have him or her under a non-compete agreement. Unfortunately, non-compete laws vary from state to state, and it is best to have the agreement signed when employees are hired as part of the deal. If you have a key employee who needs to be under a non-compete agreement, you may have to offer some type of carrot of encouragement or clearly explain the new need for them to sign. Yes, they can be difficult to enforce, but you will still have a commitment from them. There are many parts to non-competes, including sections on stealing employees, company property such as customer lists, etc. Call a lawyer.
• Be wary of key employees who control everything; if something happens to them, you would have little access or understanding of their job activities. All roads leading to one person is not healthy.

Safety

Have a safety plan in place and access to a safety consultant. Too many contractors keep working on a perfect plan and then end up with nothing. Something is better than nothing; and if a worker suddenly dies in a workplace accident, it is too late to try and find someone to advise you.

Computer Backups

It is not an issue of if your system will fail; it is a matter of when. When it does, it will be painful and costly.

• Don’t just leave it up to an office person to copy a disc, only to discover they don’t do it every day after you have lost three weeks of data. Know how the system works.
• Remember, a fire safe will not automatically protect a computer disc, as the heat can destroy it. If you have a tape drive or other system, restore it to make sure it works.
• If salespeople or estimators keep information off site, what happens to your data and info if they leave? Don’t allow such uncontrolled access.
• Make the system automatic so an employee does not have to remember to back it up. Consider an off-site company that backs up data off site during off hours.

In Conclusion

The above list represents some of the things that can happen. Hopefully, it will serve as a reminder for you to do some of the tasks you never seem to have time to accomplish.