It’s important to seek to avoid problems before they arise

Editor’s note: Michelle Stockman works with Little Rock-based Arkansas Capital Corp. to promote entrepreneurship development around the state. Stockman earned a bachelor’s degree from Loyola University-Chicago in communications and fine arts, and earned a master’s in entrepreneurship from Western Carolina University. Her thoughts on business success appear each week on The City Wire.

In a recent post in the New York Times “You’re the Boss” blog, Jay Goltz spoke about how start-up companies put their time and energy into planning, opening and operating their businesses. However, there are some mundane problems that commonly arise in small businesses that destroy all the hard work and hopes that are cast out into the entrepreneurship realm.

Entrepreneurs tackle most if not all of the tasks of the business at one point or another. As employees are added, the daily focus for business owners’ shift into sustaining operations. On the flip side, the new employees bring new liabilities to the company, and the entrepreneur can avoid many liabilities before they arise. By putting oneself in the shoes of an employee, walk through your business and see what hazards exist within your business.

Likewise, Jay Goltz offers a list of 11 commonly overlooked yet avoidable hazards for small businesses with the following:

• Fire Hazards. Watch out for space heaters and make sure you use three pronged extension cords. Space heaters are notorious for starting fires and a poorly worn extension cord will do the same. Get advice on fire prevention in your business from your insurance company or the local fire department.

• Bad receivables. Good and honest intentions do not always result in getting paid. It is very painful and difficult to cut off an old customer, especially when you need the business. But many companies go broke because of bad receivables.

• Interviewing. It is both art and science. Like a bad science experiment, it can cause explosions. Make sure those who are doing the interviewing for your company are trained to conduct interviews that will leave your company out of legal trouble. Hiring without doing background checks. While this does not guarantee your new hire is an honest good person, this will help remove the not so good candidates.

• Vehicles. Allowing someone who is not insured properly through the company to drive one can have disastrous results if there is an accident. You will be seen as having “deep pockets” — even if your pockets are empty.

• Vehicles, again! Texting while driving is the new drunk driving. Do not allow it.

• Bad Morale. If employees have a problem that goes unnoticed or unresolved by the business owners, guess who is going to feel it? The customers.

• Insurance. The three biggest small-business insurance failings include: 1) understating insurance to value; 2) not having employment-practices insurance; 3) not having business-income replacement coverage to replace lost revenue until the company is up and running again.

• The wrong accountant. Many accountants just do tax returns and are not qualified to act as an outside voice and keep an eye on the health of the company.

• Bad controls. Many companies have gone broke because of theft or embezzlement. Your accountant should help you set up these systems.

• Bad company policies. Whether they are employee or customer policies, if the policies do not support the business in a positive manner they could endanger the health of the company.

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Stockman can be reached at [email protected]