Risky Businesses

Businesses that take chances start out with a strike against them.

Starting a business is always risky. In some businesses, however, the risks are particularly extreme. If you're planning to launch an investment firm or start a hazardous waste management company, there's little doubt that you'll need all the protection you can get, including limited personal liability as well as adequate insurance. Other businesses are not so obviously risk-laden, but could still land you in trouble if fate strikes you a blow.

Here are a few red flags to watch for when analyzing the risks involved in your business:

• using hazardous materials, such as dry cleaning solvents or photographic chemicals, or hazardous processes, such as welding or operating heavy machinery
• manufacturing or selling edible goods
• building or repairing structures or vehicles
• caring for children or animals
• providing or allowing access to alcohol
• driving as the main part of the job
• allowing activities that may result in injury, such as weightlifting or skateboarding, and
• repairing or working on items of value, such as cars or antiques.

If your business will face one or more risks like those listed here, consider whether business insurance will provide adequate protection. Some risky activities, such as job-related driving, are good candidates for insurance and don't necessarily warrant incorporating. But if insurance can't cover all of the risks involved in your business, you should consider forming an LLC or a corporation, which will protect your personal assets from claims and judgments against your business.