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Simple ways business consultants can better manage risk

There are simple methods business consultants can use to manage risk and avoid unexpected losses.

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Business consulting can be a challenge: how to manage risk

Starting your own business is filled with risk (and reward), and consultants often take on the risk of their clients, depending on how they are advising, making it particularly tricky. There are a variety of methods business consultants can follow to minimize risk and manage it.

Ted Devine, CEO of small business insurance provider, insureon, notes that consultants, “whether they offer advice on management, marketing, human resources, or other areas of business – often operate as sole proprietors or independent contractors. But even if you don’t have a traditional team of employees, you still face a number of risk exposures specific to the work you do.”

Devine offers the following five methods in his own words, urging consultants to take them into account to ensure “unnecessary (and unexpected) losses” can be avoided:

1. Contracts, contracts, contracts

Contracts are key. Regardless of specialty, business consultants often have to immerse themselves in a client’s operations in order to provide sound guidance in their area of expertise. But this investment in a business’ inner workings can lead to blurred boundaries of responsibility. To prevent the scope of a project from oozing beyond the borders of the work you were first hired to do, be sure to use contracts with every client. In addition to establishing clear parameters for your work, contracts help keep client expectations reasonable and can provide invaluable evidence in the off chance that you’re hit with a lawsuit alleging you didn’t fulfill your professional duties.

2. Don’t get fined for your office location

Your home office might be illegal. Many counties have ordinances restricting or prohibiting commercial activity in residential areas. To prevent fines or penalties, make sure you have appropriate permits and adhere to any local rules for as long as you operate out of your house.

3. Insurance may not cover you

…plus, [a home office] has all the usual business liabilities. Making sure your home office is legal is just the start of managing your liabilities. Keep in mind that most home offices are not covered by Homeowner’s Insurance policies. In fact, Homeowner’s policies often include language that specifically excludes home offices and business equipment. Just as importantly, if you receive clients at your home office, you could be held liable for injuries or damage to their property that occurs on your premises.

The good news? There’s a kind of bundled insurance called a Business Owner’s Policy (BOP) that includes Property and General Liability Insurance. It protects you from lawsuits associated with injury to your clients and from the cost of repairing or replacing damaged business equipment.

4. Staying out of hot water

You can be held liable for your advice. Even though you’re not selling physical products, consulting still exposes a business owner to liability. Imagine you’re an HR consultant and you’re charged with filling a key top-level role for a technology firm. If you find an applicant who’s eventually hired and it turns out that person faked his credentials and costs the firm money and time, you could face a lawsuit for failing to properly vet the candidate.

5. Classifying employees

Classifying your employees right can save you thousands. If you’re like a lot of business consultants, you work primarily on your own, with maybe a few contractors to help manage your books or your technology. But what happens when you grow and decide to bring on a remote, part-time assistant? Depending on where you live, state law may require you to carry Workers’ Compensation Insurance – or face serious fines. Whether you’re currently operating on your own or with a team of helpers, take the time to review your state’s Workers’ Comp laws to ensure that you don’t have to spend your hard-earned revenue on compliance penalties.

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

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Business Entrepreneur

Startup helps freelancers find trusted partners for overflow work

(BUSINESS NEWS) Covailnt is a service for freelancers that takes the mystery out of collaborating, helping us all to focus on what’s in front of us.

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Trying to balance work and networking can be a huge pain even as a traditional worker; for freelancers, maintaining both categories is often downright impossible. If you’re struggling to make meaningful partnerships in the freelancing world, Covailnt may have a solution for you.

Covailnt takes the mystery out of freelancing, which—unlike romance—could do with a bit less guesswork. The service is best described as a combination of a workflow app and a social network, but its core function is to serve as a database of freelancers. Each person who signs up for Covailnt fills out a profile which includes skills, availability, location, and a portfolio; as a Covailnt user, you can use this information to determine whether you want to work with the person.

The ability to review a freelancer’s highlight reel without having to initiate a conversation is sure to be a time-saver, and you get to avoid the awkward follow-up conversation to boot.

Time efficiency is clearly a strong influence on Covailnt’s platform: each freelancer’s surface-level profile prioritizes the preview window to display their level of business, using metrics from “Not Working” all the way through “Slammed”. Having this information front-and-center makes it easy to differentiate between who in your network might be available for overflow work and who you shouldn’t contact for the time being.

Covailnt also makes it easy to find compatible people with whom to collaborate. In what always seems to be the case when a group project emerges, your go-to collaborator might be too busy to handle a joint effort, and not everyone has the time to troll through the classifieds in search of a temporary partner. Searching for a like-minded, similarly skilled freelancer via Covailnt can significantly cut down on the time you spend looking and help you prioritize the work itself.

Beyond its site-level features, the coolest part of this service is that it allows you to build a network of talented people with whom you share interests, goals, and workstyles. Once you’ve established such a network, you may find your work queue filling up with things you actually care about, enabling you to push some of your less enjoyable work to someone in your network who will give it the care it deserves.

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Business Entrepreneur

What’s the difference between an accelerator and an incubator program?

(ENTREPRENEUR) When considering your options for growing your startup, do you know how an accelerator differs from an incubator? The differences are bigger than many realize…

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There are now more options than ever when it comes to applying to as well as choosing the best startup accelerator or incubator.

For those of you who may be new to the startup world (welcome!), I’ve compiled some helpful information to determine the difference between an accelerator and incubator, and which one might be best for your company.

Yes, all programs tout value to burgenoning businesses such as business plan assistance, introduction to other founders and mentors, and most importantly, guidance on fundraising to VCs and angels. But what’s the difference? Here’s the lowdown:

Incubators:

Incubators are built specifically for founders that are at the initial stages of starting their companies and don’t have set program timelines.

Unlike accelerators, incubators operate on a less structured time schedule with less programming and resources, and it’s not uncommon for a company in an incubator program to last for several months or even years.

Incubators typically offer their portfolio companies free office space, business plan advice, and mentorship.

The incubator may offer assistance in introducing your company to potential investors, but it’s not always the main purpose of the program (whereas the majority of accelerators have “demo days” where founders specifically pitch to potential investors).

Incubators are especially popular in local economies and can be run by organizations like non-profits, civic organizations, co-working spaces, and universities. Since incubators have less of a time requirement and offer less resources, you’ll only need to commit to a small amount of equity, often around 1%.

Accelerators:

Accelerators are more focused, time-intensive structured programs for companies with a proof of concept/minimum viable product (MVP) and market validation.

Accelerators do just that: accelerate company growth for startups with proven potential to exit (either eventually sell or go public). Because of this, accelerator interview processes are typically extensive and competitive.

Most programs can last anywhere from 10 weeks to 3-4 months. With many top accelerators, you’ll be expected to move to the city where it’s hosted and spend 40+ hours a week minimum in their dedicated coworking space, and several accelerators offer housing stipends to make the move easier.

These programs typically conclude with a demo day to pitch your product to a variety of community leaders, angel, and institutional investors.

Many accelerators are industry-agnostic, but some specialize in specific industries such as The Brandery or Comcast LIFT Labs.

Accelerators offer exclusive access to investors, web hosting credits, other perks, and special access to program mentors as well as program alumni.

Because of this, the equity required is often somewhere in the range from 3% to 6%.

Y Combinator, one of the most prestigious accelerators in Silicon Valley, invests $150,000 in each startup in addition to its program for a 7% equity stake.

Overall, incubators and accelerators can offer extensive value for founders, but make sure to research carefully when choosing a program. Next up, we’ll talk about choosing the best accelerator for your company and founding team, so stay tuned!

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Business Entrepreneur

Entrepreneurs: You’re unemployable in your own company, must define your role

(ENTREPRENEURS) Once you’ve built a successful business, it’s time to reexamine your role and determine where you fit in best.

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In my experience, most entrepreneurs are “accidental entrepreneurs.” They happened to be good at something, or they had a unique one-time opportunity to provide a product or service to the market. Then years later, they wake up one day and realize that they’re running a big business.

As an entrepreneur, one of the unintended consequences of building a business is that you become essentially unemployable within your own organization. After living the life of freedom, flexibility and responsibility of being a business owner, it’s difficult to go back to a “nine-to-five” job. This is why many entrepreneurs don’t enjoy staying with their businesses after they’ve sold to other organizations. Within months, they are frustrated that they’re no longer in control and the new owners are (in their opinion) making poor choices.

I see many situations where entrepreneurs are bad employees in their own organization. In fact, they may be the worst team members in the organization by having inconsistent schedules or poor communication skills and/or by inserting themselves into areas that aren’t useful. They can also have too much freedom and flexibility. And while most entrepreneurs insist on clearly defined roles, expectations and goals for all of their employees, they don’t always take the time to define their own roles, expectations and goals.

So why do entrepreneurs become bad employees?

I believe that it’s because they don’t have someone holding them accountable. Think about it: Who do they report to? They’re the owners. Part of the definition of “owner” is being accountable for everything but not accountable to anyone. Having a board of directors, a peer group or a business coach can provide some accountability for them, but another solution is to clarify their roles in the company and then abide by those definitions.

If you find yourself “unemployable” in your business, it’s time to define your role. It starts with outlining your main focus. Do you concentrate more on day-to-day execution or strategic, long-term decisions? Do you consider yourself an owner-operator or an investor?

Most entrepreneurs start as an owner-operator and put in countless hours of sweat equity doing whatever needs to be done to build the business. But over time they reinvest earnings in the business and hire a management team so they can step back and take on a more strategic role. Sometimes it’s not clear when the entrepreneur makes that transition, which can lead to challenges for the entire team.

Focus: Strategic Overview

If your main role is in dealing with long-term, strategic decisions, then it’s important for you to communicate that to the team. Clearly delegate tactical roles and responsibilities to the leadership team.

I’ve seen many instances where owners do more harm than good by haphazardly injecting themselves into tactical decisions that should be handled by the leadership team. Instead of jumping in when they see something they disagree with, I encourage owners to actively “coach” their leadership team to be better leaders. The approach of micromanaging every decision of others will frustrate everyone and lead to an underperforming organization.

I have one client that decided his role was to build strategic relationships and work on a new service offering. He was confident that his leadership team could handle the day-to-day operations of the business. Over time he discovered that being in the office every day was actually a distraction for him and his team. So, he moved his office out of the building.

To maintain his ownership responsibilities to the company, he scheduled one afternoon a week to physically be in the office. Team members knew they could schedule time with him during that weekly window when he temporarily set up office space in a conference room. Not having a permanent office in the building also sent a message to the team that he was not responsible for day-to-day decisions. Sometimes not having an office in the building is better than the team seeing the owner’s office empty on a regular basis.

Focus: Day-to-Day Execution

If you decide that your role is in the day-to-day execution of the business, then clearly define your role in the same way you would define any other team member role. Are you in charge of marketing? Sales? Finance? Operations? Technology? R&D? Or, some combination of multiple roles? Take the time to outline your responsibilities and communicate them to the team.

Just as you define your role, also define what you are NOT going to do and who is responsible for those areas. After all, sectioning off some tactical work does not abdicate you from long-term decision-making. You must set aside time to make the long-term, strategic decisions of the company.

Being an entrepreneur sounds glamorous to those that haven’t done it, but ultimately, the owner is accountable for everything that happens in their organization. It can be quite sobering. And while some entrepreneurs have a delusional belief that they can do everything in a company, it’s not a path to long-term success.

All entrepreneurs have to decide what their role should be in their organization – even if it means that they’re contributing to their “unemployable” status.

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