Risk management: here is how you limit business risks

Business risks are something you want to minimise as much as possible. There are several ways to do that. See what you can do to cover your business risks.

Choose the right legal form

Some legal forms have legal personality, while others do not. A legal form without legal personality, means you are personally liable for your company's debts. Examples of this type of legal form include the eenmanszaak (sole proprietorship), vof (general partnership), and maatschap (professional partnership).

Legal forms with legal personality separate your private and business assets. Thesed include a coöperatie (cooperative), bv (private limited company), and nv (public limited company).

When choosing a legal form, it is also important to consider potential tax benefits. The most commonly chosen legal form is the eenmanszaak and, for companies with more than one owner, the vof. These legal structures are often more favourable for tax purposes than, for example, a private limited company. This is due to the start-up and self-employed deductions from income tax.  This can add up to thousands of euros a year.  With a bv, you cannot use the start-up and self-employed deduction. For higher profits, a legal structure with legal personality such as the bv is often more favourable. Your tax advisor or accountant can help you making a choice.

How to use general terms and conditions

In your general terms and conditions, you lay out rights and obligations for you and for your customers. T&Cs can cover the following:

• Quote

  Are quotes binding or non-binding? How long do quotes stay valid?

• Transportation

  Who pays the transportation costs? Is the transportation insured and by whom? Who has to pay the import duties, if any?

• Delivery time

  What is the delivery time? What will happen in the event of force majeure?

• Payment

  What is the payment term? What are the collection costs? Will the buyer have to pay interest if they fail to pay on time?

• Retention of title

  Does ownership pass only after payment has been made?

• Warranty

  What are the warranty conditions?

• Disputes

  Are they handled by a court or resolved through arbitration? Under what law?

• Liability

  Can you limit your liability? Will you pay compensation, and if so: how much?

General terms and conditions are not mandatory, but they are convenient.  Make sure that the customer knows you have general terms and conditions. You can file general terms and conditions with the Chamber of Commerce or with the Court (in Dutch). Doing so is not mandatory, but it does offer greater certainty and looks more professional.

Insure your business risks

When you start a business, you want to minimise your risks as much as possible. Taking out insurance helps with that. Which insurances do you need in your business? The KVK Insurance Check (in Dutch) helps you choose your insurances. 

Some insurances are mandatory, others are useful. As an entrepreneur, you do not want to be held personally liable after an accident or damage. Check out the most important insurances for businesses.

Good to know: private insurances, such as your liability insurance, do not cover your business risks.

Building up a pension

Did you not make any arrangements for your pensions? Then you will only receive a state pension (AOW) when you reach the retirement age. Do you want to build up a pension alongside your AOW? There are several options. You can op a banksavings account, take out an annuity (lijfrente), save or invest money yourself. There are also collective pension funds for self-employed professionals without staff. Making a pension plan is tailor-made. Get advice from a specialist so that your pension suits your needs.

Rules and regulations

Complying with the law is an easy way to mitigate business risks. If you flout the rules, you could be fined. Go to https://business.gov.nl/ for a full list of rules and regulations that apply to entrepreneurs, or download the Nieuwe Wetten App (New Laws App, in Dutch) to stay up to date on legislative changes and new laws.

A safe start

Once you start your own company, everyone will be able to find you. Apart from running the usual entrepreneurial risks, you will have to deal with aggressive advertisers, fraud and crime sooner or later. What safety risks can startups encounter and how can you mitigate them? These tips will help you get your business off to a safe start and protect your website, online shop, or business premises.

Want to know more about the risks you face as an entrepreneur? Take a look at our Business risk collection.