< Back to Must Reads

9 “Boiler Plate” Contract Terms You Should Know

Entrepreneurs sign a lot of contracts. From starting your business to hiring workers and signing up clients, contracts are everywhere. And while you may be an expert on your business plan, you’re probably not an expert on contract terms–especially the “boiler plate” terms found near the end of most contracts.

While it may be tempting to skip over those boring terms, you really need to read them since they can have contract-wide implications.

Below is an intro to nine of the most common terms.

1. Entire Agreement

When signing a business contract, you usually want that contract (and that contract alone) to govern your deal. Accordingly, this provision will say that “this agreement” controls the deal and that all prior negotiations, documents, etc., are not valid. If you have addendums or other documents that should be binding on the parties, it is usually a good idea to reference them here (or somewhere in the agreement).

2. Amendment

This provision usually says that a party may not amend the contract without the other party’s prior written consent. Further, if consent is provided, the amendment must usually be in writing.

3. Waiver

A “waiver” occurs when one party breaches the agreement and the other party doesn’t enforce their rights. For example, your client may pay you 35 days late, but you don’t charge them interest (i.e., you are waiving your right to enforce the contract). This provision will say that the waiver is only binding if it is in writing and that one waiver doesn’t mean you will waive future breaches.

4. Severability

A severability provision usually says that if a court rules a certain provision too broad to be enforceable (or unenforceable in its entirety), that the court should reduce the provision to make it enforceable (or in the case of removing an entire provision, the court should still enforce the remainder of the agreement). This is helpful to ensure the entire agreement is not invalidated due to one small issue.

5. Assignment

This provision usually says that a party may not assign their rights under the contract (or the contract itself) to a third party without the other party’s written consent. Further, the assignment must usually be in writing. The assignment provision can be mutual or unilateral. If it is unilateral (i.e., only one party can freely assign), then you should consider whether that makes sense for your deal.

6. Notices

Most contracts contemplate various “notices” that must be provided from one party to the other (for example, a termination notice). A notice provision will set out how the notice should be sent (i.e., overnight, via email, etc.), to which address it must be sent, and when it will be deemed delivered. Often, if a party’s address changes, it will be required to update the other parties to the contract.

7. Governing Law

There are two parts to governing law provisions. First, which state’s laws apply. You may not know this, but a court in Florida can use Alaska law to resolve a dispute (this applies to all states). Thus, stating which state’s law will apply will help the parties to understand their rights up front. The second part is what court the parties must use. This is usually called “jurisdiction” or “venue.” This section requires the parties to use a specific court to resolve their disputes. In this regard, you should be careful not to agree to use a court far away from your place of business.

8. Attorneys’ Fees

In America, the general rule is that the losing party in court does not have to pay the winning party’s attorney’s fees. However, you can include a provision in your contract that requires the losing party to do so. If you are more likely to sue the other side, then you may want to include this. If the other side is more likely to sue you, then you may not want to include this.

9. Counterparts & Signatures

This provision usually says that if the parties sign different copies of the agreement, they should be treated as though they were just one copy. However, in our modern business world, more and more contracts are being signed using electronic signature platforms like DocuSign and HelloSign. Thus, the counterpart language isn’t as important. However, it is often a good idea to say that the parties may use digital signatures and that digital and photocopies of the agreement should be treated like original paper versions.

Looking for more?

The best way to start a new business and actually succeed is to get help from other professionals. To do that, you can enroll in the Kauffman Foundation’s FastTrac program at www.fasttrac.org for free courses and materials to help you write your business plan and start your business.

< Back to Must Reads

Business Formation: What Are They and How to Choose One

LLCs. S-corporations. C-corporations. Having trouble understanding the alphabet soup of business formation? You’re not alone!

Yet deciding which type of business formation (also known as business or legal structure) works best for your start-up is among the most important decisions you’ll make, especially when it comes to your finances and taxes, as well as your personal liability.

“Your business structure affects how much you pay in taxes, your ability to raise money, the paperwork you need to file and your personal liability,” according to the Small Business Administration.

And we’re here to help you decide the business formation that’s the best fit. First, let’s take a look at your options. Then, we’ll ask you a few questions to help you determine your course of action.

1. Sole proprietorship

Think of sole proprietorships as the easy button of business formations. You simply start doing business under your own name. Some states may require you to have a business license or a local permit, depending on your type of business, but there aren’t any filing requirements beyond those.

Because sole proprietorships are so easy to start, they’re traditionally the most popular type of business. According to the Small Business Administration, more than 70 percent of businesses in the U.S. are sole proprietorships.

You’re probably saying to yourself, “Where’s the catch?” And here it is. As a sole proprietorship, you don’t have any liability protection. That means your personal assets can be used to satisfy a business debt or legal judgment.

Plus, if you hire employees and they incur any sort of liability, you’re responsible for it, and your personal assets could be at risk.

Here’s another important financial consideration of sole proprietorships: the IRS will view you, the individual, and your business as one entity. While that means you get to avoid filing sometimes complicated corporation taxes, you miss out on deducting corporation benefits and have to pay a self-employment tax.

2. Partnership

From both a paperwork and operations standpoint, partnerships are straightforward. States don’t require specific partnership documents, but it’s a good idea to create a partnership agreement that’s reviewed and signed by all participating partners. When opting to establish a partnership, you have three options:

• General: This is your basic partnership, as detailed above. Although paperwork and filing requirements are minimal, you should check with state and local regulations to see if you need any licenses or permits to operate.
• Limited: Think of a limited partnership as a general partnership with limited liability protection. To create a limited partnership, one partner is designated a general partner with unlimited liability. Then, other partners are limited partners, which means their liability is the same as their investment. These limited partners are typically silent partners—they invest in the business but don’t involve themselves in day-to-day operations. Limited partnerships are pass-through tax entities, so taxes are paid at the individual level.
• Joint Ventures: These are formed by two or more people who are working on a single project. As a result, they’re typically more limited in scope and length of time than a partnership, which may continue indefinitely. According to Nolo.com, the necessary elements of a joint venture include “an express or implied agreement; a common purpose that the group intends to carry out; shared profits and losses; and each member’s equal voice in controlling the project.”

Additionally, joint ventures are treated differently when it comes to taxes. Parternships are pass-through tax entities, while joint ventures can be taxed as a corporation or a partnership.

Partnerships, like sole proprietorships, don’t offer much in the way of liability protection. You’ll find the specifics of partnership liability covered by various state regulations, but most of the time, each partner has unlimited liability for any business debts or lawsuits, including those that result from actions of another partner.

The SBA has some helpful guidance on when partnerships are the best fit, including for businesses “with multiple owners, professional groups like attorneys, and groups who want to test their business idea before creating a more formal business.”

3. Limited Liability Company (LLC)

As David Ingram wrote for LegalZoom, “limited liability companies combine the advantages and disadvantages of corporations and private partnerships.”

In an LLC, business owners — referred to as members — aren’t personally liable for business debts or legal judgments. So, when you open a business bank account or take on a debt, the LLC is responsible for it, not the individual members. Additionally, LLC members have the flexibility to decide if they want to be taxed as a partnership or a corporation, unless your LLC has only one member. Then, the LLC is taxed as a sole proprietor. There’s no limit to the number of members your LLC can have, but LLCs can’t issue stock. LLCs do, however, have significant flexibility when it comes to deciding how to allocate profits and losses, which is defined in an LLC’s operating agreement.

LLCs require some set-up, but if you’re forming a simple LLC, this can usually be completed for a few hundred dollars. Be sure to check with your state first, which may have standards of LLC formation that will guide your next steps.

4. Corporation

And that brings us to corporations, which are the most complex — and expensive — of your business formation options. Two types of corporations exist: C-corporations and S-corporations. C-corporations are considered the default because they have fewer requirements. However, S-corporations typically save on taxes because they’re treated like a sole proprietorship. “The profits (or losses) are passed through the S-corp to the shareholders, and are only taxed to the shareholders and reported on their personal tax returns,” wrote Edward A. Haman, Esq., for LegalZoom.

Both types of corporations have a lot in common. To create one, you file articles of incorporation with your state’s Secretary of State. Corporations are required to have elected directors (typically chosen from among a corporation’s owners, or shareholders), and you may have to include these names in your paperwork. Once the corporation is running, profits (or dividends) are distributed to shareholders according to the number of shares they each own. Additionally, corporation owners have limited personal liability protection because the corporation is considered a separate entity from the owners.

C- and S-corps are required to do the following:

• Issue stock
• Adopt by-laws
• Hold annual director and shareholder meetings
• Maintain meeting minutes
• Issue written resolutions for any significant decision
• File annual reports with state government
• Pay annual fees

And regardless of which type of corporation you choose, you’ll want to be sure to obtain applicable permits and licenses; register with the IRS, state and local tax agencies; and open a corporate bank account.

4. Questions to help determine your business structure

Whew! That was a lot to cover. But, we’re guessing that you might already have an idea of which business structure will work best for you.

To help solidify your decision, consider these four questions:

• Can you cover your liability? Sure, it’s anxiety-inducing, but you need to do some worst-case planning. If you incurred a significant debt or faced a legal judgment, are you in a position to cover it? If not — or if you have personal assets that you want to protect — then you’ll likely want to establish an LLC or a corporation.
• Do you need financing to start your business? Your business structure can play a key role in how easy it is to get financing. For example, most investors might be more hesitant to invest in a sole proprietorship because of a lack of formal guidelines. If you require a large amount of capital to get your business up and running, you may want to opt for a corporation, which gives investors an opportunity for an initial public offering (IPO). At the very least, consider a limited partnership, which helps protect limited partners and also frees them from the responsibility of making business decisions.
• Will you offer stock? If your answer to this question is “yes,” your way forward is clear: you need to start a corporation. Because S-corps are more complex, you can always start with a C-corp and later file the required paperwork to shift your business to S-corp status.
• Do you plan to hire employees? Your workforce is another important factor when considering liability. If you run your business as a sole proprietorship, for example, you’ll not only be personally liable for any business debts or judgments; you’ll also be responsible for any liability that results from employee actions. Even if you don’t start with employees but you know you’ll be hiring soon, consider at least an LLC to help protect yourself and your assets

If you’re feeling a bit overwhelmed by your options and how best to move forward, don’t stress — this is a big decision, and not one you want to take lightly. It might help to consult fellow entrepreneurs to get their input. You might also want to speak to a lawyer and accountant, who can make knowledgeable recommendations based on your specific situation.

You do have some degree of flexibility in terms of changing your business structure, especially if you start with something simple like a sole proprietorship. However, if you have immediate investment or employee needs, you may want to go ahead and start with at least an LLC, which gives you a slightly more formal structure without the myriad requirements and expenses of a corporation.

And remember: more help is just a few clicks away. Kauffman FastTrac, a free online course, gives you all of the information you need to start your business, including determining your business structure. Register and start the course anytime.

< Back to Must Reads

5 Tips to Finding the Right Business Attorney

If you want to start a business, you need to find a good business attorney to help with any contracts, SOWs and business formation, etc. And while there are over a million practicing lawyers in America, it can be hard to find one that is perfect for your new business.

In this post we’ll look at five things to consider when searching for an attorney that can help your business achieve its goals.

Finding the Right Experience

Perhaps the biggest thing to consider is whether your attorney has the appropriate experience for your business. A common misconception is that all attorneys do the same thing. That can’t be further from the truth. Some lawyers never step foot in a courtroom, while others are there every day. Some lawyers are experts at contract language, while others are experts at resolving DUIs. And if you pick the wrong kind of lawyer for your business, you are bound to end up with poor (or at least not great) advice.

For that reason, always ask about whether your prospective lawyer has experience representing businesses. From there, ask if they have experience working with your kind of business. Some business lawyers are experts at counseling restaurants, while others might be experts working with construction companies.

Understanding Their Pricing

Most lawyers charge by the hour and, depending on where you are, their rates can be as low as $100/hour or as high as $1,500/hour (the average is around $250/hour). If your lawyer charges hourly, be sure to ask for an estimate on what you should expect for each project and keep tabs on how much time they’ve put in since the last time you spoke with them.

Although hourly is still the standard, more and more business lawyers are offering fixed fees and some are even offering subscription legal services. For many small businesses, and especially new businesses, this is a much better approach because then you know exactly what you’ll be paying your lawyer.

Understand How They Work

Just like with any professional, you should make sure your lawyer works the same way you work. Are they responsive to emails, or do you need to pick up the phone and call them? Can they process signatures electronically, or do they need you to come to their office to sign things? Will they invoice you electronically, or do they require you to mail in a check after receiving a paper invoice? All of these items should be discussed up front to make sure you are not hiring someone that will not work like you.

Get a Referral

By far the best way to find a lawyer is to ask your fellow business owners for a referral. You should start with other entrepreneurs that own businesses similar to yours and then branch out as needed. If you can’t find one that way, consider contacting your local bar association or law school as they can probably provide a list of attorneys. And obviously you can always search online.

Tips for Managing Your Relationship

Many business owners avoid talking with their attorneys due to their high fees. But the truth is that spending money on lawyers up front can help you avoid disputes and problems later. And if you don’t call them until the dispute or problem arises, you’ll almost certainly pay your attorney more to fix things than you would have up front.

From there, be sure to keep an honest and open dialogue with your attorney. Discuss your goals, ask questions about things that confuse you, and never ignore fee discussions. The more transparent you are with your lawyer, the better they can help you.

Keep Asking Questions!

Working with legal documents is just one of many important things you’ll have to do to start and grow a successful business. If you want help with all of the various things, you should enroll in the free FastTrac program offered by the Kauffman Foundation. Their free resources can help you succeed. Learn more and sign up at www.fasttrac.org.

< Back to Must Reads

5 Ways to Keep Burnout At Bay

Grueling schedules, little to no time off and the pressure of juggling a myriad tasks, details and responsibilities — the life of an entrepreneur is nothing short of challenging. And when launching or running a business becomes too much, entrepreneurs risk meeting an intimidating adversary: burnout.

The thing about burnout is that it affects entrepreneurs in different ways. Some entrepreneurs facing burnout simply need a few days to recharge. Other, more severe cases may make it difficult for entrepreneurs to continue with their businesses.

Burnout can strike at any time, but it’s most prevalent at the end of the year. You’ve worked your tail off the last 12 months, maybe even without a break. Plus, the pressure of a new year is looming: what will you accomplish? How will you grow? What’s the next step?

Here’s some good news: burnout can be avoided. The best way to minimize your risk of burnout is to take a step back and examine your schedule, your workload and your body’s natural rhythms. We’ll take you through five tips that can help you steer clear of burnout and get the downtime you need without compromising your business’s productivity.

Let’s go ahead and start a little self-care before we dive in. Grab your favorite beverage, settle in your comfiest chair, and, once you’re settled, continue reading. It’s time to banish burnout.

1. Take a day off.

Entrepreneurs are known for working long hours and crazy schedules, and for good reason — there’s always something to do when you’re running your business or preparing for launch!

Yet even when you’re feeling overwhelmed by your to-do list, you’ll get more done (and help protect your health) if you schedule time off. For example, if you regularly work seven days a week, can you give yourself at least one day a week to relax and recharge?

It’s also not a bad idea to look ahead and identify opportunities to take a longer break. Depending on the type of business you run, the holiday season is a prime time to take a few days off, since business in many industries tends to slow in the week between Christmas and New Year’s.

One more tip: try to schedule a day off after a particularly grueling busy period. Maybe you’ve spent weeks preparing to exhibit at a convention or tradeshow. Or you’re preparing to launch a new product or service. Or your business has a busy season, and you’ve done all you could to keep things running smoothly and efficiently. Once that milestone is complete, try to take at least one day to rest, spend time with friends and family or enjoy a favorite activity (more on that later in the post).

2. Create a support system.

Whether you work from home, your own office or a coworking space, there’s no denying that life as an entrepreneur can be lonely. That’s why building a support system of trusted friends and fellow entrepreneurs is important.

Sure, you can use members of this group as a sounding board when you’ve hit an obstacle or are developing a new idea. And if you feel yourself becoming overwhelmed by your business and approaching burnout, reach out to those in your support system to vent and clear your mind. You’ll likely find that the entrepreneurs you know have been in a similar situation and can throw you a much-needed life preserver when it feels like you’re drowning.

If you feel your enthusiasm for your business waning, it might also help to surround yourself with energetic entrepreneurs that can reinvigorate you and help you remember your “why.” Try looking for entrepreneurial meet-ups in your area, including 1 Million Cups, Creative Mornings or start-up showcases.

3. Delegate.

It’s not always easy to cede control of tasks to others, but part of running a successful long-term business is the ability to delegate.

Take a close look at your workload and how you’re spending your time. If you feel like you’re in perpetual catch-up mode or you can’t seem to get ahead of your business curve, it might be time to bring in some help. Not everyone can afford to add full-time employees to their business, especially in the early days.

Instead, look at the work you want to delegate, then examine your options. Maybe you need help with scheduling and administrative tasks. Consider a virtual assistant who could help you remotely and also allow for a smaller initial investment than, say, bringing on a full-time business manager.

Or maybe you need help with some finite tasks or projects. You could hire a contractor on an hourly or per project basis to complete the work. If you don’t have a candidate that’s top of mind, reach out to your network for recommendations or see if your city has a resource like Kansas City-based The Freelance Exchange, which helps pair clients with freelancers.

4. Treat yourself.

When you’re up to your eyeballs in work, taking care of yourself can easily slip to the bottom of your priorities. Yet giving yourself time for self-care — even if it’s just a few minutes a day or week — can go a long way in helping you feel relaxed, even re-energized for the work that lies ahead.

The beauty of self-care is that when it comes to treating yourself, the possibilities are nearly endless. First, think about what you enjoy: exercise? Meditation? A spa treatment or massage? Going to a movie? Reading a book?  Crafting?

Then, you can make a plan to, as the kids say, #treatyoself. Schedule your favorite indulgent activity just like you would a meeting, then do everything you can to keep the appointment. And take a similar approach to self-care as you would your business. For instance, you don’t need to suddenly book yourself on a week-long meditation retreat in the mountains (but we can dream!). Instead, carve out a few minutes each day (or a few times a week) to meditate in a favorite peaceful spot.

One of the advantages of self-care is that it adds up quickly, and a little bit can go a long way, especially if it’s been awhile since you’ve done something nice for yourself. Making time for something you love is part of your investment in your overall mental and physical health, which, over time, can be one of your business’s biggest assets.

5. Know when you’re most productive.

If you routinely struggle to get work done, it’s worth reexamining your daily schedule and how you’re blocking off your time. Are you more productive in the morning? Do what you can to avoid meetings or calls during that time and, instead, focus on checking things off of your to-do list. If you find you’re more apt to get things done in the afternoon, then make that your more productive time.

Depending on your type of business and operating hours, you might even want to go so far as to slightly shift your schedule. Maybe you prefer getting a later start — say, 9 or 10 a.m. — and work until 6 or 7 p.m. Early birds could shift that schedule so that you start your day earlier.

That brings up another tip: do what you can to adhere to a schedule. As an entrepreneur, it’s easy to work throughout the day (and even night). But by setting boundaries, including a daily schedule, you’re more likely to stay focused but also give yourself the time away from work you need to relax and rest, which is one of the most effective ways to minimize your risk of burnout.

Here’s one last tip: ditch the guilt trip. It’s so easy for entrepreneurs to talk themselves out of downtime or self-care or delegating. But think of it like this: the goal for any entrepreneur is to work smarter, not harder. Any steps you can take to do just that — and make sure you’re taking care of yourself — will be some of the most effective ways to achieve both long-term professional success and personal fulfillment.

< Back to Must Reads

4 Ways to Grow Your Business During the Holidays

‘Tis the season for gift giving, get-togethers and … business growth?

Whether you want to thank current customers, reach new customers or boost sales, the holidays can give you prime opportunities to grow your business and build brand recognition.

We’ve compiled a few ideas to help you give your business the gift of success. Oh, and we’ve included an idea that’s just for you, because there’s no better time to give yourself a little time off and recharge your batteries!

1. Exhibit at a holiday pop-up market.

Your city is likely host to a number of pop-up artisan, maker and other holiday markets throughout the holiday season. Whether you’ve exhibited multiple times or this is your first show, why not add your business to the exhibitor line-up?

If you’ve exhibited before, participating in a holiday pop-up market can help you reach a different audience. And if you haven’t exhibited before, the cozy, more intimate feel of most holiday pop-up markets can give you a welcome environment in which to sell your goods or services.

Since holiday pop-up markets are traditionally hosted on a smaller scale than other types of events or conventions, check with event organizers or a fellow exhibitor to get the scoop on your booth space. You may find, especially if you’ve exhibited before, that you can scale back your typical display. Regardless of the space constraints, you’ll want to be sure you have basic booth supplies: a table cover, signage, business cards and other collateral, plenty of product and the appropriate display fixtures.

In addition to selling your goods or services, look for other ways you can use the holiday pop-up market to your business’s advantage. If you have an email newsletter, for example, set out a sign-up sheet so that people can opt-in. Be sure to post on your company’s social media channels with the applicable event hashtags and handles. And if time allows, carve out a few minutes to network with your fellow exhibitors and learn more about what other local entrepreneurs are doing.

2. Connect with customers.

The holidays are the perfect time of year to thank your customers by sending a personalized holiday card or even a small gift. Work with your local commercial printer to design and print an eye-catching branded holiday card. You might also make a list of key customers, stakeholders and supporters (and check it twice!) and send them a small token of your thanks. You certainly don’t need to compromise your budget on gifts, but a thoughtfully selected gift can leave a lasting impression on the recipient, which likely translates into continued brand loyalty and support.

Stuck on what to give? Shop local! There’s likely no shortage of incredible brands and makers in your community. Not only will you delight your recipients, but you’ll also support a fellow entrepreneur. And if your recipient list is relatively short (and your budget allows), try assembling a locally themed gift box that celebrates some of your city’s best flavors and finds. Consider a bag of local coffee, a colorful coffee mug and a locally made sweet treat; or two pieces of locally made glassware paired with a local wine or spirit. Add a short handwritten note and you’ll have everything you need to surprise and delight your recipients.

3. Launch a holiday promotion.

Breaking news: people spend a lot of money during the holiday season! Shocking, right? With so much buying activity, this is an ideal time of year to launch your own holiday promotion.

The details, of course, depend on what you sell. Popular promotions include free shipping, a percentage off your purchase, gift with purchase or introducing a new, limited edition item. As you decide the specifics of your promotion, keep in mind your customers and your bottom line. For some small businesses, for example, offering free shipping — or even a flat shipping rate — can be cost-prohibitive, erasing any possible net gains of the promotion. Be sure to do the math before you commit to an idea.

One other tip? Think a few steps ahead of your promotion. A holiday promotion is, of course, intended to drive sales. But how can you use that promotion to get people to come back and buy from you once the holidays are over? You could include a coupon in their order. Or enclose a postcard or other brief informational piece that highlights other products. By keeping your long-term goals in mind, you’re more likely to avoid customers who simply swoop in for the deal and never return.

Whatever type of promotion you decide to launch, be sure to carefully track it so that you can measure performance and decide if it’s something you want to do again. And don’t forget to promote your promotion! If you’re exhibiting at a holiday pop-up market, whip up a brief postcard with details on the promotion. If you have email subscribers, send them an announcement so that they can take advantage. You could even generate some anticipation by teasing the announcement, then revealing the promotion on a specified date on your website, social media platforms and any other marketing channels you use.

4. Treat yourself with time off.

Entrepreneurs typically don’t have much — if any — downtime. But the holidays are an ideal time to give yourself the gift of a break. After all, you’ll likely have plans to celebrate with family and friends, and you should do what you can to soak up every minute.

Look for other opportunities to take at least one day off and do something you love … or, better yet, nothing at all! It’s easy to guilt yourself into working, but you deserve a break. And it will help keep you rested, energized and at a lower risk for burnout. With a little holiday R&R, you’ll be refreshed and ready to conquer your 2019 business goals.

We’ll leave you with one last gift: the gift of knowledge! If you find yourself in need of resources or insight regarding a particular business topic, register for Kauffman FastTrac, our free online course that helps you launch your business. If you’re post-launch, that’s no problem — you might just find a helpful refresher or information about a topic you hadn’t yet considered. The best part about Kauffman FastTrac? It’s self-paced, so you can learn on your own time, including in your holiday PJs! Hot cocoa is optional.

< Back to Must Reads

5 Tips to Find an Insurance Broker

Creating a business involves a lot of risk. But successful entrepreneurs learn how to mitigate those risks to improve their odds of success. One of the best ways to mitigate risks is purchasing insurance. There are many different kinds of insurance available to new and existing businesses, including general liability, errors and omissions, property, and more.

You should research options but, more importantly, you should find and work with a good insurance agent or broker to analyze your risk and purchase the appropriate policies for your business.

Here are 5 tips to help you find the right insurance professional for you.

Commercial vs. personal

To begin, you should recognize that many insurance professionals specialize in only personal policies such as life insurance, personal property insurance, auto insurance, and the like. While these professionals know more about insurance than you, it doesn’t mean they understand the world of commercial insurance policies. That’s why you should always seek out a professional that has experience working with businesses (and if you are a new business, then someone with experience working with new businesses). That way, you can make sure you are not missing an important policy such as a directors and officers liability policy.

If you already have a great relationship with your personal insurance professional but they don’t do business policies, ask for a referral. They are bound to know many other agents and brokers (more on referrals below).

Agents vs. brokers

You should also note that insurance agents and brokers are not the same thing. Insurance agents will look for policies from only one specific carrier (unless they are an independent agent). While they may have a good policy at a good rate for you, they may not. That’s why it might make more sense for you to speak to a broker. Insurance brokers will seek policies from multiple carriers. This means they can shop around for different policies at different prices and you may find a better overall fit by going through a broker.

Your unique needs

It’s true that many businesses have similar risks such as general liability, property, and auto. Those are pretty standard and are fairly easy to cover with insurance.

However, you should always consider what unique risks apply to your business and then consider whether you need to speak to a unique insurance professional about those risks. For example, if you run a construction company building high-rises, you’ll certainly have a greater risk of injury for your workers. On the other hand, if you spend your entire career building creative assets, you may have greater risk exposure for copyright infringement.

Accordingly, you should seek out an insurance professional that has experience in those areas and who can help you find the appropriate policies to mitigate those risks. And most importantly, keep in mind that certain risks (for example, intellectual property insurance) require special policies for coverage.

Consider how they work

As with searching for any other professional, consider how your prospective insurance professional works. Some prefer emails, some prefer phone calls, and others prefer in-person meetings. In either event, make sure you and your insurance professional share similar working habits to avoid poor communication.

Get a referral

Without a doubt, the best way to find a good insurance broker or agent for your business is to get a referral. First, ask fellow business owners (especially owners of similar businesses) who they use and whether they are happy with their relationship. From there, you can check in with various trade organizations and entrepreneurial support groups in your city and you can ask your state insurance regulator for a list of professionals (or find a list on their website).