! · Hard times
Risk, contracts and protection
Most crises are cheaper to prevent than to survive. A few basic protections, like written agreements, the right insurance, backups and separated finances, cost little now and can save the business later. A few hours of preparation buys real peace of mind.
Think about risk like a detective
For each risk, ask two questions: how likely is it, and how bad would it be? Something unlikely but devastating, like a data breach or a lawsuit, deserves protection even if it feels remote. Something likely but small, like an occasional late payment, needs a routine, not insurance.
Get it in writing
Handshake agreements feel friendly until there's a disagreement. A short written agreement protects both sides because it makes expectations clear before work starts. For client work, it usually covers:
- What's included, and what isn't. See scope creep on Clients & Pricing.
- Price, payment terms and what happens if payment is late.
- Timelines and what each side needs to provide.
- How either side can end the agreement, and with how much notice.
- Who owns the work, and how confidential information is handled.
- Limits on liability, where appropriate.
Have an attorney review your standard agreement once, then reuse it.
| Risk area | Basic protection | Who to ask |
|---|---|---|
| Lawsuits from mistakes | Professional liability insurance for service businesses, plus clear written agreements | Insurance agent, attorney |
| Accidents and property | General liability and property insurance | Insurance agent |
| Employee injuries | Workers' compensation, which most states require for employers | Insurance agent, state rules |
| Data loss or breach | Backups, strong passwords, two-factor login, cyber insurance | IT help, insurance agent |
| Personal liability | The right business structure, and business and personal finances kept separate | Attorney, accountant |
| Losing a key person | Documented procedures and cross-training | Your systems |
| Tax and compliance | Money set aside for taxes, deadlines on a calendar, a professional to check | Accountant, enrolled agent |
How protected is your business?
Check each one that's true today.Run the worst case before it runs you
Once a year, run a premortem on the whole business: "It's a year from now and the business failed. Why?" The answers are your risk list.
Backups, renewals and filing deadlines are the boring routines that quietly protect everything else. Put them on a calendar.
Insurance and legal review cost money. Compare that with what one uncovered lawsuit or lost client file would cost.
This is where self-consulting stops. Contracts, insurance and business structure need a qualified professional.
General education only, not legal or insurance advice. Requirements vary by state and industry. Talk to an attorney, insurance professional and accountant about your business.