Hiscox


PARTNER CONTENT:
COURIER FOR HISCOX

Running a business takes guts and determination but it also helps if you do your homework. Here you’ll find all you need to know about the six most common threats to any small business and a set of simple actions that you can take to make sure that when a rainy day comes, you’ve got a decent umbrella. You’ll also find insights from a range of experts, too, to help shed light on how to outrun even the scariest threats.

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DON’T GET

Think your business is too small to be hacked? Think again. Phishing scams and ransomware are increasingly targeted at small businesses on the assumption that they’re less prepared than bigger companies. Personal data, such as credit-card information, that you hold on behalf of customers is often a target, potentially compromising the trust and loyalty of the people who deal with you.

Reinforce
passwords

1

Avoid
the obvious

You’ve heard it tonnes of times – passwords are important. The strongest are made up of three or more unrelated words, with a hearty dose of numbers, symbols and caps thrown in. Above all, make sure your email and online banking passwords are bullet-proof. If someone hacks into your email, they could easily crack into nearly all your other accounts, too.

Do an
IT MOT

2

Keep cyber security
software up to date

Install antivirus and malware software on all company equipment, and make sure staff keep on top of their security upgrades. If you’re not totally comfortable with how it all works, don’t ignore it; get an expert in to help or at least take a look at the information on the government’s Cyber Streetwise website.

Train your
team

3

People are often the
weakest link

It takes just one member of staff opening a dodgy email attachment to bring down your security. Build your human firewall – educate everyone on cyber risks, teach them what a malicious email looks like and make information security part of your culture.

Consider
insurance

4

Protect your cash and
your customers

This should be a no-brainer if your business is based on technology, especially if you
hold sensitive customer data. Hiscox cyber and data risks insurance offers not just financial compensation but helps minimise damage to the business and its reputation.


DON’T RUN OUT OF

It would be great if money came in and out of your business just like clockwork, exactly how you expected it to, every month. But these things rarely work out perfectly; clients and customers don’t always pay on time and unforeseen staffing needs or investment opportunities can make your bank balance shrink in the short term. Plenty of startups survive for years without making a profit but only if they have a healthy cash flow. So set up a few simple systems early on to save on stress in the long term.

Get
forecasting

1

Keep on top of what
comes and goes

Whether it’s with a spreadsheet, or an online forecasting tool, keep tabs on your finances. Set budgets, check how well you’re sticking to them, assess the effect new hires or business will have on your cash flow and make it easier to foresee when a late payment could cause problems so you can make a contingency plan.

Invoice
on time

2

Make sure there’s no
delay on your side

Send an invoice as soon as work has been completed. Use email for speed and record keeping, and don’t be afraid to chase late payments. Be charming but persistent; if you’ve done the work, you deserve to be paid for it. Spend a bit of time early on creating an invoice template that looks professional, contains all the necessary details for tax and legal purposes and clearly states who owes what and when.

Negotiate
terms

3

Quick-paying clients are
gold

Big clients are known for slow payments. Try getting them to agree to pay within 14 days but never settle for more than 30. Balance profit margins with quick payments; don’t underestimate the value of gaining small clients who pay on time even if you don’t make quite as much from your business with them.

Build a cash
reserve

4

Prepare for the
unexpected

If you can, put some money aside – it could help you put in a big order for stock at a discounted price, or enable you to take on a new client, without needing to delay while you borrow. Startups need to be able to cough up a lot of one-off payments – equipment, deposits, decorating bills, staff uniforms, insurance, you name it – making a buffer even more essential.


Protect Your

Taking on premises of any kind – workshop, store front or rented, owned or shared office space – is exciting, and often fairly key to your business’s success. It’s also an extra responsibility to add to the pile. So once you’ve found a great spot, decorated it and decked it out with the tech and equipment you need, make sure to protect it.

Stay
secure

1

Scrutinise your building’s
safety

Regardless of what your landlord says, double-check that your windows and doors are secure, install a burglar alarm and smoke detector, and, if your business is based in an area with a high crime rate, or likely to show up on a thief’s radar, think about adding CCTV. Consider your employees’ safety, too – if possible, don’t rent a space in the dodgy part of town.

Use good
judgement

2

Don’t forget the
obvious measures

Keep the office or workspace tidy and free from hazards. Back up your stuff – saving duplicates of any crucial documents and data – and keep expensive equipment out of sight. If you deal with money on-site get a safe, and set up clear practices to ensure that there’s never too much cash left in there.

Train your
staff

3

Be sure your staff
take responsibility

Everybody makes mistakes but putting routines and rules in place can help us avoid them. Teach staff how best to use equipment and machinery as soon as they join. Consider limiting who has access to the premises, keep an eye on who comes and goes and make it clear what equipment can and can’t be taken off-site.

Get
insurance

4

Cover yourself against the
unpreventable

It’s not just thieves, and fire and water damage that might mess things up for your business – should a client or member of the public be injured while on your premises, you could be held responsible. Find a good insurance policy with a sensible excess, to help your business get back on track if you have an unlucky week or two.


Don’t get

Like it or not, when it comes to starting and running a business, there are some legal loopholes that you’ve just got to jump through. But don’t let scary-sounding phrases like incorporation, confidentiality, terms and conditions, privacy policies and data protection send you running for the woods. Remember, you don’t have to get your head around them by yourself – that’s what lawyers are for.

Get a good
lawyer

1

Make sure they’ve got the
right experience

Just because a lawyer advertises as a startup specialist, they might not be the right fit for your business. Before working with legal professionals, look at who they’ve helped before, whether those companies faced similar legal issues to yours and work out whether they could be a useful ally for your business in the long run.

Anticipate
a split

2

Work out how to resolve
disagreements

If you’re starting a company solo, forget this one. If you’re starting it with someone else, pay attention. Even with the best intentions, business relationships don’t always work out. Don’t pretend that it won’t happen to you and your partner – make sure you’ve got a clear founders’ agreement that spells out how to resolve disputes if you fall out.

Work up
contracts

3

Have your paperwork
ready to go

Write shareholder agreements and employee contracts ahead of time, making obligations, requirements and entitlements crystal clear. Draft a template supplier agreement and/or service contract to tweak as appropriate. Have a look at what others in your industry include in theirs but definitely make it clear when payment is due and where liability lies.

Protect
your IP

4

Safeguard against copycats

Intellectual property sounds mysterious but it’s actually quite simple – it covers the unique things that your business creates, like your product design, and it’s worth protecting. Trademark your logo, register your name, copyright your media output and register your designs. This stuff can get complicated, so seek advice from someone who understands it well.


KEEP A POSITIVE

It’s been said a hundred times, but it’s true: your name is your best asset. Plenty of tears and toil go into building and maintaining a good reputation, but even the best are fragile. Everyone who starts a business wants to do the best job possible, but mistakes happen, and sometimes those slip ups affect clients and customers. They could lead to minor problems – like a bad article on the first page of your Google search – or much bigger ones – like legal action.

Keep your
ears peeled

1

Listen out for what people are saying

In a way, it should be easier than ever to manage your reputation – much of what people are saying about you will be on the internet. The challenge is finding it. Setup Google Alerts, keep tabs on media coverage, share the good stuff and do whatever you can to avoid repeating the bad.

Be polite &
professional

2

Stay cool
no matter what

No matter how tricky some clients or customers get, respond to them quickly, keep calm and don’t slag them off to third parties. You might have a relaxed atmosphere in the office but make sure that all employees know the right tone to use when dealing with everyone else, in person or online.

Know some
experts

3

Build a support network

Have a PR specialist and a lawyer that you know you can call on if anything takes off. In the thick of unexpected or unwanted media attention, you’re unlikely to make the best decisions or know what’s the best thing to say. But with good advice, it might be possible to turn bad press into useful exposure, turn angry customers into happy ones, or at least minimise the long-term damage.

Indemnify
yourself

4

Protect your business against mistakes

Most accountants, lawyers and architects are required to get professional indemnity insurance. But any business that offers advice, design or a service should consider taking it out, in case a grumpy customer comes after you. It will also cover you for any accidental breaches of copyright – say, if someone claims you’ve used their logo on your site.


MAKE THE RIGHT

People: they’re difficult. No matter what problems your product throws up, or what speed bumps your service hits, it’s your own employees that are likely to create some of the biggest challenges for your business. An enthusiastic and dedicated team can be the making of a startup; a mismatched bunch could be its undoing. And regardless of who’s in your team, if you can’t afford to keep them – or keep them safe and happy – it’s bad news for your business. So, before making that first hire, do a bit of homework.

Consider the
commitment

1

Reassess your requirementss

Hiring a full-time member of staff is a big deal. You’re not just committing to pay them a set amount, on time, every month; you’ll also need to shell out on National Insurance, pension, tax and payroll services. Can you definitely not do this work yourself, get help from friends, or use a part-timer?

Don’t rush
to hire

2

Do your homework before recruiting

From how to write your job listing to where to post it, from what questions to ask at interviews to how many candidates to see, there are loads of things to consider before beginning the recruitment process. Don’t rush into it or you might end up burdened with an ill-matched employee. This is one task you don’t want to rush.

Prepare the
paperwork

3

Make it clear where everyone stands

Note down a checklist of what documents you need to send to your new employee and what they need to give to you – offer letter, references, proof of right to work in the UK, contract, employee handbook and the rest. Writing a handbook might sound like a slog but having things like hours, holiday entitlement and notice periods clearly stated is
a smart move. There’s plenty of official information on gov.uk.

Keeping
staff safe

4

Look after your staff and
your business

Whether your employees are using chainsaws or computers, you need to carry out a health and safety assessment. It’s also a legal requirement to get employers’ liability insurance from the moment you make your first hire. Hiscox insurance covers the legal costs of defending or paying out a compensation claim, in case your staff suffer from stress or slip on a banana skin.