Owning your own business can be a stressful thing at the best of times.

Aside from the trials and tribulations of simply running the business on a daily basis, there is the wider issue of the external environment that businesses operate in. This marketplace can be characterised by increasingly complex levels of risk exposure, for businesses of all sizes.

When it comes to disputes and legal action, prevention is always better than cure. Hiscox specialise in insuring small and medium sized businesses in the service sector and have seen how many businesses could have avoided problems by improving their risk management.

It has been well publicised that an estimated 80% of businesses which suffer a major incident close within 18 months

It is of course essential to comply with all regulations. One particular area of difficulty involves complying with employment legislation. The number of employment disputes reaching tribunal has significantly increased year on year from 156,081 in the 12 months to April 2005 to 238,564 in the 12 months to April 2007. Many businesses will not have the expertise to deal with employment issues or setting up the correct policies and procedures so should seek external assistance from solicitors or HR consultants.

It is important to have an appropriate contract with your customers. What if one of your customers suffered a loss and claimed that you were responsible for doing something which you thought you weren‘t? A contract would define who is responsible for what and the limits of the parties‘ liability. The lack of an effective contract can make disputes very difficult, and expensive, to resolve with increased risk to your business. Businesses should seek legal advice to create a standard contract and to advise them when using their customers‘s contracts.

It has been well publicised that an estimated 80% of businesses which suffer a major incident close within 18 months. So, should the worst happen, a sound and workable business continuity plan will be an essential part of avoiding becoming one of the 80%.

Finally, insurance is available as a safety net rather than a contingency plan. The bottom line is that a dispute will not only affect your business financially, but it could also significantly damage its reputation. You should investigate what cover is available with your insurance provider, not forgetting that cheapest may not be best. Some providers will offer additional services like legal help lines, HR advice and business continuity planning assistance as part of their service to you too.

Not all businesses are prepared for a dispute or major incident - is yours?

For more information on Hiscox Insurance click here