Protect Your Small Business from Risk
Small business owners manage a number of risks to keep their companies secure and profitable. From fire hazards, to general liability issues to cyberattacks, it’s easy to forget your business also needs to protect its reputation, as well as business assets from competitors or even disgruntled customers.
Here’s how to protect yourself from these often forgotten, but important risks.
Your business’s reputation is one of your most valuable assets, yet also a precarious one. One bad customer review can fester and grow and eventually damage the reputation you’ve worked so hard to build.
On the other hand, positive reviews help attract customers and clients, you may not have been able to reach using your traditional marketing vehicles. Research shows 91 percent of consumers say positive reviews make them more likely to frequent a business, which is why it’s crucial to manage your online reputation. Here’s how to get on top of it:
- Set up a Google Alert: It takes less than a minute to create a Google alert on your name, your business name, and the products you make or sell. From then on, Google does the work for you by scouring the web for mentions and sends you an email with the results. Set one up for competitors too, to keep an eye on what’s being said about them.
- Claim your business on Yelp: If your business isn’t on Yelp, your customers are going to wonder why and probably go with a company that is. Start by claiming your business and then, fixing any inaccuracies listed. Be sure to respond to critical reviews, and follow up with the free tools Yelp offers for building a strong reputation.
- Track social mentions: If you want to know what’s being said about your business on social media, you can simply do a search in each platform and see what pops up. You can also search by hashtag for mentions relating to your industry. If you want a third party to do the monitoring for you, look into companies like Social-Searcher.com that will comb the platforms for you and deliver the results to your inbox. Talkwalker searches the internet (like Google Alerts) and Twitter for you.
- Ask customers for reviews: Let customers know you care about their opinions by listing your social media pages in your store, on your web page and in marketing materials. Ask clients personally to spread the word and give you a positive review if they are happy with your business. Finally, get permission to use customer testimonials as a marketing tool.
Risk from Competitors
Competitive risk can come from anywhere. And it comes in many forms. In general competitive risk is when the actions of your competition can negatively impact your business.
One source of competitive risk is when similar businesses open in your area or neighborhood. If you’re a retailer, the growth of e-commerce means your competition may come from anywhere around the world. The key to containing that type of competitive risk is to build up a loyal following of customers, treat them well, and hope they stick with you for the long haul.
Competitive Risk From WITHIN Your Business
Another factor in managing competitive risk is to protect your business from potential competition flourishing within your own walls, i.e. employees leaving and taking business (or trade secrets) with them. That’s where non-compete agreements may help.
In the simplest definition, a non-compete agreement is a contract between employer and employee which may prohibit the employee from working for an employer’s competitor or starting a competing business for a specified period of time, usually between one to two years, and within a restricted geographic area, such as city or county limits.
There are many restrictions when it comes to what you can and can’t put in a non-compete agreement and the rules vary by state. You can’t force an employee to sign a non-compete. However, if the employee doesn’t yet work for you, it could enter into your decision whether to hire the person. In most cases, the terms of a non-compete could be negotiated to make each party happy.
Unfortunately, even if you have an employee sign a non-compete, it doesn’t mean an employee can’t take you to court to break the non-compete. In many cases, the courts will find in favor of the employee if the non-compete is seen as unreasonable and prohibitive to the employee trying to make a living. What’s considered “reasonable” also varies by state.
For example, in New York, a non-compete is reasonable when:
- The agreement is necessary to protect the employer’s legitimate interests
- It is not harmful to the general public, and
- Not unduly burdensome to the employee. You’ll find most states define reasonableness similarly, but it’s best to make sure.
You can alternatively (or in addition, whatever the case may be) ask the employee to sign a non-solicitation agreement. This contract prohibits the employee from soliciting sales away from the employer or trying to lure the employer’s other employees to join the competitor. Again, there will be time limit restrictions. Perhaps more important, the non-solicitation agreement can also protect your business from the former employee taking company trade secrets, client contact information and pricing data.
Today’s rapidly growing and ever-changing marketplace increases your exposure to competitive risk, so it’s important that you learn to manage those risks. As the expression goes, “the best offense is a good defense,” so you should prepare for all possible situations.
Copyright infringement can also be a source of competitive risk. If you have proprietary technology, content or information, it’s important to legally protect those assets. There are both federal and state unfair competition laws on the books. “Unfair competition is an umbrella term that actually encompasses several different types of economic tort,” says the FindLaw website. Several of these can increase your competitive risk, including trademark and copyright, stealing trade secrets, and false advertising.
There are various ways to protect your trademarks, copyrights and other proprietary information. It’s crucial you vigilantly watch for infringements and take action if and when they occur. Progressive Commercial says you need to make sure you don’t let any of your registrations lapse or expire. They remind you to create “a follow-up plan… to ensure those protections are still in force.”
Also key is to be proactive when competitive threats emerge. Depending on the nature of the threat, you may need to open additional locations, launch new product lines, invest in new technology or equipment, or create new marketing campaigns.
To learn how to manage other small business risks, download Progressive’s e-guide, “Prepare and Protect: The small business owner’s guide to identifying and managing risks.”