How to Protect Your Service Business


Insurance – when you started your business, was it the last thing you thought about; after selecting a name, completing the incorporation paperwork, opening a bank account, finding space, getting people to work for you, then.. “Oh yeah, I better get some insurance.”  And if you’re like me, that thought was quickly followed by, “What kind of insurance do I need?”, only to be displaced by “What kind of insurance is there?”

Well, there are plenty of insurance types a business owner needs to consider.  Some are required, but not everything will be right for every business.  There are basically two types of insurance you need to understand – insurance related to the business itself, and insurance related to being an employer.

I’ve covered employee related insurance in another episode, so check it out if you need more information.

Business Insurance

There are a lot of policies available to cover everything from operational mistakes to business interruption.  And as I mentioned in last week’s episode, your particular industry may require a bond or other specialized insurance, so be sure to check with your insurance broker or attorney.

Insurance companies selling business insurance, offer policies that combine protection from all major property and liability risks in one package (they also sell coverages separately).  Small and mid-sized business often purchase a Business Owner Policy or BOP to cover Property Insurance (it covers building and company owned contents); Business Interruption Insurance (this covers the loss of income resulting from fire or some other catastrophe that disrupts your business’ operation); and Liability protection (this protection covers you if a customer is injured while visiting your place of business, or by using your product).

Professional Liability (also called Errors and Omissions) protects service and advice businesses (like most service businesses) against financial losses from lawsuits that your client might file against you.  For example, if you gave your client some advice or information that they acted on – and it caused a big problem for them – they may blame you and file a lawsuit against you.  That’s when your Errors and Omissions policy would kick in to protect you, pay attorney’s fees, and cover damages (after your deductible of course – there’s always a deductible).  Now, E&O insurance covers different things than the Liability protection of a Business Owner Policy – so don’t get those two mixed up.


Not too long ago I did a full episode on client agreements (Why You Need a Client Contract).

But I do want to mention again – it is really important that you lock down your client agreement – and yes, you do need one.

It’s the guide of who is working with whom, what’s going to happen, what service is being provided, (and what isn’t), what happens if or when the scope of services is changed, who owns the product, what if things go wrong, how much you’ll charge, when is payment due, what’s confidential, and all sorts of other terms that are critical when you’re working with clients.

So, make sure you have a good agreement -hopefully drafted by an attorney – that you can feel comfortable standing on.

…you don’t want to go to all the trouble of building a business, marketing like crazy and getting recognition for your brand only to get a cease and desist letter from someone with the same name.

Oh, by the way, I know I’ve mentioned using an attorney a number of times now.  That’s just the reality of setting up a company with a strong foundation.  One of the things I said in the very first episode, is – you’re going to have to be ready and willing to invest in the company – right from the beginning.  So plan for it, and do what you need to do to make sure you and your company are protected.

Protect The Brand

The client agreement will cover a lot of ground in protecting your business while you’re working with the client. But don’t forget the basics. You have to protect brand.  Let’s start with your name and logo.

I would suggest getting your name trademarked. That way, you can be sure you have the legal rights to use it in your business capacity. After all, you don’t want to go to all the trouble of building a business, marketing like crazy and getting recognition for your brand only to get a cease and desist letter from someone with the same name. It’s a pain to unravel and can be very expensive. So, better safe than sorry.

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You can pay a service to do it for you (Google can tell you who’s available), or you can do it yourself. If you want to go the do it yourself route, take a look at the US Patent and Trademark Office website and they’ll guide you through. It’s not difficult and will save you a lot of potential trouble in the end.

And here’s a pro tip – if you think that at any point in the future you will want to sell your company, or get acquired, think about using something other than your personal name or initials as the name of your business. When or if you decide to go live on that private island you always wanted, your name will end up lagging behind you. And it can be a nightmare to untangle a name while holding on to the brand awareness.  So, in summary – your potential buyer will look at your name on the letterhead as a point in the ‘con’ column.  Besides, you might want to use it while you build your personal brand.

Also be sure to go on a domain registration site like GoDaddy, and register your company name as a url.  Also consider registering other iterations too, for instance .net and similar spellings.  You want to make sure that if people are looking for you on the web – it’s easy to find you.

And while you’re at it, grab your company name on all the social media platforms too.  Your branding should be consistent throughout all your media channels – even if you aren’t posting on them just yet.  Remember, plan for the future.

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