

Small business owners manage a number of risks to keep their companies secure and profitable. From fire hazards to general liability issues to cyberattacks, it’s easy to forget your business also needs to protect its reputation, as well as business assets from competitors or even disgruntled customers.
Here’s how to protect yourself from these often forgotten, but important risks.
Your business’s reputation is one of your most valuable assets, yet also a precarious one. One bad customer review can fester and grow and eventually damage the reputation you’ve worked so hard to build.
On the other hand, positive reviews help attract customers and clients, you may not have been able to reach using your traditional marketing vehicles. Research shows 91 percent of consumers say positive reviews make them more likely to frequent a business, which is why it’s crucial to manage your online reputation. Here’s how to get on top of it:
Competitive risk can come from anywhere. And it comes in many forms. In general competitive risk is when the actions of your competition can negatively impact your business.
One source of competitive risk is when similar businesses open in your area or neighborhood. If you’re a retailer, the growth of e-commerce means your competition may come from anywhere around the world. The key to containing that type of competitive risk is to build up a loyal following of customers, treat them well, and hope they stick with you for the long haul.
Another factor in managing competitive risk is to protect your business from potential competition flourishing within your own walls, i.e. employees leaving and taking business (or trade secrets) with them. That’s where non-compete agreements may help.
In the simplest definition, a non-compete agreement is a contract between employer and employee which may prohibit the employee from working for an employer’s competitor or starting a competing business for a specified period of time, usually between one to two years, and within a restricted geographic area, such as city or county limits.
There are many restrictions when it comes to what you can and can’t put in a non-compete agreement and the rules vary by state. You can’t force an employee to sign a non-compete. However, if the employee doesn’t yet work for you, it could enter into your decision whether to hire the person. In most cases, the terms of a non-compete could be negotiated to make each party happy.
Unfortunately, even if you have an employee sign a non-compete, it doesn’t mean an employee can’t take you to court to break the non-compete. In many cases, the courts will find in favor of the employee if the non-compete is seen as unreasonable and prohibitive to the employee trying to make a living. What’s considered “reasonable” also varies by state.
For example, in New York, a non-compete is reasonable when:
You can alternatively (or in addition, whatever the case may be) ask the employee to sign a non-solicitation agreement. This contract prohibits the employee from soliciting sales away from the employer or trying to lure the employer’s other employees to join the competitor. Again, there will be time limit restrictions. Perhaps more important, the non-solicitation agreement can also protect your business from the former employee taking company trade secrets, client contact information, and pricing data.
Today’s rapidly growing and ever-changing marketplace increases your exposure to competitive risk, so it’s important that you learn to manage those risks. As the expression goes, “the best offense is a good defense,” so you should prepare for all possible situations.
Copyright infringement can also be a source of competitive risk. If you have proprietary technology, content, or information, it’s important to legally protect those assets. There are both federal and state unfair competition laws on the books. “Unfair competition is an umbrella term that actually encompasses several different types of economic tort,” says the FindLaw website. Several of these can increase your competitive risk, including trademark and copyright, stealing trade secrets, and false advertising.
There are various ways to protect your trademarks, copyrights, and other proprietary information. It’s crucial you vigilantly watch for infringements and take action if and when they occur. Progressive Commercial says you need to make sure you don’t let any of your registrations lapse or expire. They remind you to create “a follow-up plan… to ensure those protections are still in force.”
Also key is to be proactive when competitive threats emerge. Depending on the nature of the threat, you may need to open additional locations, launch new product lines, invest in new technology or equipment, or create new marketing campaigns.
To learn how to manage other small business risks, download Progressive’s e-guide, “Prepare and Protect: The small business owner’s guide to identifying and managing risks.”
With over 50 years of experience, Progressive Commercial Insurance offers a full range of business insurance products featuring competitive rates and first-class service. They offer customized insurance solutions for both heavy and light commercial vehicles, as well as business insurance coverages including general and professional liability, workers’ compensation, business owners’ policies and more. Progressive is a Fortune 100 company and trusted by thousands of small business owners to protect their livelihood.
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