As you begin building your technology business, you need to plan ahead and think about what risks you could be exposed to.
When we say "risks," we're talking about your…
- Financial risks.
- Client data security risks.
- Legal risks
- Cyber risks.
All of these threats are intertwined. To prevent lawsuits, you need to protect your clients' data. To protect your finances, you need to prevent lawsuits. IT risk management has to be a comprehensive effort to minimize this web of liability.
You'll need to adopt "best practices" (the recommended ways of preventing lawsuits and minimizing financial risks) while also covering your potential lawsuit costs by investing in Technology Errors & Omissions Insurance and other small business insurance policies.
Here are nine things you can do:
- Diversify your income by expanding into multiple areas of IT that fall under your expertise.
- Always work to improve your client communications. Many lawsuits come from misunderstandings. For some recommended techniques for improving your communications, see "The Technology X Factor: Client Communication."
- Stay abreast of data breach and cyber risk news.
- Know how your contracts work and use them. Read "Essential Contracts for IT Businesses" for more on what you need to know about IT contracts.
- Cover your professional liability exposures with Technology Errors & Omissions Insurance. E&O pays your legal costs when clients sue you over data breaches, poor performance, missed deadlines, and other financial loss incidents caused by your professional services.
- Become a good money manager. If you're periodically short on cash because of a fluctuating work schedule, find ways to even out your cash flow.
- Cover your basic business liabilities with a Business Owner's Policy, which insures your property and pays for lawsuits over slip-and-fall injuries, client property damage, and other basic business risks.
- If you hire outside workers, make sure you know HR best practices. (For HR recommendations for IT businesses, see "HR Tips: Hire and Retain the Best Team.")
- Work hard, but remember to have some fun and get some sleep. Running a small business is a rewarding but tiring endeavor. Avoid the burnout and stay fresh!