Here’s Part 2 of our 10 tips to avoid business risk:

Be Cautious When Fundraising

photo-1439565983992-3ee6dd957b9c.jpgEven though there are provisions that enable startups to accept funds from non-accredited investors, it’s wise to exercise caution when going down this path.  If you’re putting together a crowdfunding campaign, pitch, or business plan, it’s a good idea to talk to a professional to make sure that your plan is vetted and to ensure that you have an intellectual property plan in place. You should also be aware of who’s able to see your campaign or pitch and who you’re trying to target. If you just want accredited investors to look at your pitch, make sure you have your campaign set up correctly, or that you’re usine the right platform for the audience you’re seeking.

Keep Good Records

Meticulous bookkeeping is probably no entrepreneur’s idea of a good time. But good records are vital to any business. An accurate accounting of your business is important not just for the purposes of the IRS, but for investors and banks as well. If accounting isn’t an area of strength for you or anyone at your company, outsourcing to professional bookkeepers is one option to ensure your records are kept accurately and in order.

Have an Intellectual Property Strategy

For most startups, their intellectual property (IP) is the most valuable asset they have, as it’s tied to at least 80% of the company’s value. That’s why having an IP strategy is vitally important to all early-stage businesses. Having an IP strategy will help ensure that all of your company’s intangible assets are protected, and can help prevent you from accidentally infringing upon others’. Having ownership of your IP will make for a greater valuation of your company and allow you to generate revenue through licensing. No matter what type of business you’re in, make sure that you know and own the IP your company has created.

Be Realistic With Financial Projections

Every entrepreneur has to go into business believing that they’re going to succeed. And while you shouldn’t be disabused of that optimism, you also have to be pragmatic when it comes to projections. When setting projections for your company’s performance, it’s always better to be realistic rather than overly optimistic. Setting a big number may sound good, but failing to meet the mark will look worse than keeping with more modest and attainable figures. And no matter what sort of projection you decide upon, make sure you know your numbers by heart. There’s nothing more harrowing than standing in front of your investors or creditors and stumbling over things you should already know.

Disclose Pending Litigation

If you have a lawsuit pending against your company, being coy about it won’t help matters. Be upfront with investors about any legal action your company is facing, even something as simple as a cease and desist later. While you may worry about how a pending or potential lawsuit looks, it would be far worse for them to find out later that you’ve been withholding such important information from them.


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