By Darrell Sansom, Managing Director at AXA Business Insurance
Ask any successful business leader, owner or entrepreneur the secret to their greatest success or that of their business heroes, and you’ll find a common theme in their response: innovation is everything.
“Take the risk” they’ll tell you. “Think differently, push the boundaries, and break the norm.” “Failure is opportunity.” “Go do it.”
It’s clear that if we’re to believe popular business wisdom, fortune favours the bold. And while true innovation requires a level of risk, it’s important to remember there’s a balance to strike – particularly when your business is paid to deliver consultancy or expert advice to other organisations.
Even the sharpest and most creative people can make a mistake, miss a point or misread a situation. And no matter how good your intentions, how strong your research or how high your experience, if you’re paid to deliver bold decisions, there’s a chance that at some point you could give advice that clients think is wrong.
Some slip-ups have bigger consequences than others, and some can be harder to recover from. And while smaller ones have minimal short term impact, the biggest ones lose money, cost money, throw away a competitive advantage or disintegrate goodwill, loyalty and trust – in which case the client may have the right to sue for compensation.
And if a client does seek compensation for a problem or even a crisis they believe you’ve caused, the defense fees alone could prove a crushing blow to your business.
Yet according to research published by Datamonitor in 2014, almost a quarter (22 per cent) of businesses who give professional advice as part of their service don’t have professional indemnity cover. This means they’re not protected against legal fees or compensation claims if a client – rightly or wrongly - alleges they’ve made a mistake at work.
So how do you ensure your bold decisions don’t turn into business blunders?
The way, of course, is to make sure you plan effectively and don’t put yourself in a situation where you could be deemed culpable of major mistakes.
This doesn’t mean sticking only with the safest ideas. It means educating yourself, educating your clients and communicating with them regularly to ensure your advice is fully understood and agreed before action is taken.
Here are AXA Business Insurance’s top tips:
• Talk and listen
Work to build strong client relationships and understanding, and make sure you are in constant communication as and when things happen and decisions are made. This way, you’ll fully understand their strengths and vulnerabilities as well as their wants and needs, and they’ll fully understand the limits and cautions to your advice
• Show you know
Show you have a good grasp of your client business, their competitors and the situation at hand. Talk to them about how you have considered the impact of each and every decision and the range of potential outcomes on their profit, competitive advantage and reputation. Meet regularly to confirm you have an up to date understanding of what’s going on, and that they do too
• Agree the outcome
Publish plans that detail a way forward based on the current situation, ideal outcome and available facts. If you can show your thinking and agree actions and measures with the client, they are less likely to hold you responsible if things go awry
• Get it signed
Ensure all work is signed off and that you have a paper or digital trail to prove it. Work together with your clients to build up joint responsibility for sense checking ideas and looking out for mistakes
• Stay protected
And finally, don’t let a slip up destroy all that you’ve built. Professional indemnity insurance protects you if a client claims you’ve made a mistake in your work so it may be of benefit to you. It protects you from legal defense fees and compensation claims and it’s important for businesses that give advice, offer a professional service or handle client data or intellectual property