Deadly Sins

Deadly Sin #7

All offense, no defense.

In the excitement of launching a product or service, a new entrepreneur can overlook the importance of establishing basic defenses against the perils of doing business. The three primary defense strategies include:

1. establishing a limited liability entity such as a corporation or an LLC;
2. obtaining adequate business insurance; and
3. forming contracts to protect yourself in customer, supplier and vendor relationships.

Although most businesses won't face liability from lawsuits, baseless claims or threats from lawyers, having taken the right precautions can lessen the risk.

Business start-ups face seemingly endless decisions and changing circumstances, any of which can lead to their demise. By avoiding the seven deadly sins, however, you'll gain direction and confidence to pursue your short- and long-term goals, while avoiding the major setbacks of start-up.

David M. Anderson is a Minneapolis attorney specializing in business and Internet law.

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This article was originally published in the August 2001 print edition of Entrepreneur with the headline: Deadly Sins.

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