By Bizna Brand Analyst

Nominated Senator Paul Njoroge just showed us that everyone values their business very much. Watu lazima wapate unga. But obviously, he went too far. The senator fired in the air to stop an attempt by Vivo Energy officials to close a petrol station that he is running. The bullet narrowly missed Vivo CEO Mr. Igathe.

It’s said that the senator who represents the disabled shot once forcing a group of workers and members of the public to scamper for safety during the incident at Karai along the Nairobi-Nakuru highway.

Would you go to such lengths to protect your business? You probably shouldn’t. There are better ways to do it.

As a business owner, it’s your responsibility to do everything within your means to limit risk and to keep the business running smoothly. But how does one go about limiting the possibility of a lawsuit or shutdown to ensure business continuity? In this article, I’ll take a look at five actions you can take today to protect your company.

1. Watch what you say and do

First of all, when it comes to your business image, owners and their employees should avoid making any public announcements or conducting any business that might be considered questionable. This means avoiding things like libelous or potentially slanderous statements, but it also means not doing business with unscrupulous individuals. You may not think it’s a problem working for a group of individuals who are known for shoddy business practices – because you know your company’s ethics are above reproach – but if they take a hit, your company’s name may be linked to them in the fallout.

This point also includes limiting any possible conflicts of interest. Business owners and their employees must avoid situations where a conflict of interest may present itself. Situations such as these can damage your integrity as a business owner and could land you in legal hot water. For example, sitting on a decision-making board and helping pass an ordinance that benefits your business would be a conflict of interest, even if you didn’t make a decision with any benefit for your company.

Knowing how to handle your competitors well will also do you good because sometimes business rivalry might get out of hand and competitors might try to bring you down.

2. Hire a really competent lawyer

You may need such a person to advise you before you act or on how to react when you’ve been sued. Business owners should also attempt to secure a lawyer that is familiar with industry laws and customs in the area in which the business operates. Care should also be taken to retain a lawyer with expertise in a particular field if necessary. If your company is anticipating legal challenges from the Kenya Revenue Authority (KRA), it makes sense to hire a tax attorney.

There are several potential resources to help you find a good attorney. These include cold calling and interviewing from the phone book or professional references from other business owners.

3. Separate yourself from your business

Many business owners own and operate their businesses as sole proprietorships. The only problem with this is that in the event the company is sued, the owner’s individual assets (such as their cars or home) are fairly easy to attack or attach in a court of law.

The solution to this, or at least a way to limit the possibility that the owner’s personal assets might be the target of a suit, is to have a trust own the business. A trust is a legal entity that, in most cases, files its own tax return and can own property, businesses, cash, securities and a host of other assets. If a business is owned by a properly established trust, and it is sued, in most cases the only assets that can be attacked or attached in a court of law are those that are in the trust itself.

Incorporating separates your company’s finances from your own. This makes your house and personal wealth safe from attack even in the event you lose your business in a judgment. The downside to incorporating can come from understanding and keeping up with the additional laws, reports and taxes that the government requires for a corporation.

4. Take insurance seriously

Make sure you insure most aspects of your business.  In addition to purchasing insurance, another way to insure yourself against liability is to build protection into your contracts. If an act of nature, a specific supplier or some other uncontrollable act can make it impossible for you to fulfill a contract (and thus open yourself up to legal action) then you should be putting to ink that you are not liable for incomplete work due to these factors. Discussing the possible clauses and legal phrases needed in your work contracts is one of the best ways to employ your lawyer’s time and it will reduce your need for a lawyer later on in your business venture.

5. Protect your files

As most businesses these days work quite intensively on computers, it makes sense to emphasize the safety requirements for your computer system. Businesses should have updated antivirus and other types of security software loaded and activated on their systems. If a computer system were to go down because of a virus, the business may be at risk of not being able to perform certain contracted work. In addition, key files could be lost or stolen, which could then lead to legal action from clients and/or suppliers.

Employ Backups

In the event of a massive technological breakdown, you should have a set of backed up files to refer to. This could mean performing daily, weekly or even monthly backups, and making your clients aware of which you employ. Keeping these backup files offsite will also help to ensure your company’s continued safety.

Additional Safeties

In the event of a disaster will your business be able to function? Failure to operate could lead to the company’s inability to live up to certain contractual obligations or to satisfy other legal or financial agreements.

Consider securing alternative work sites, portable generators or ways to have employees work remotely to make it a little easier for your company to perform its work when the the forces of nature throw you a curve-ball.

Bottom Line

Business owners have the responsibility to protect their companies and their personal assets in the event of a lawsuit. With these five actions under your belt, your business should be well on its way to a legal- and hassle-free future.