The opinions expressed by the collaborators of Emprenderos are their own.
By now you’re familiar with the ongoing saga of Alec Baldwin and the tragic shooting accident of a cinematographer on the set of his movie “Rust.” Earlier this month, Baldwin was charged with involuntary manslaughter in Arizona, the state where the incident occurred, and faces up to 18 months in prison if convicted. This is a horrible situation. But it’s also a reminder of the responsibilities we all have as entrepreneurs. Because, as the film’s producer, Baldwin co-owned the company. And with this great opportunity for profit also comes great responsibility.
And these responsibilities extend to all areas of our businesses.
For example, as a certified public accountant, I have signed tax returns for clients in the past. And while I have both professional and legal requirements to meet, ultimately a business’s declaration is the responsibility of the business owners. If, like most small businesses, your business is owned by yourself or perhaps with a partner or two, any problems, errors, or problems with your tax return are ultimately your business. Even if you were unaware of an omission (or commission) you are still liable. You can’t just blame everything on your accountant. Your signature is on this statement. You are the owner and are liable, both civilly and even criminally, if there is a major mistake. So read your return. Ask questions. Know what you are signing before you sign it.
Related: Does Your Business Put You at Risk for Lawsuits?
The same goes for mistakes made by your employees while on the job. If an unsuspecting teller accidentally runs over a puppy on the way to make a bank deposit or pick up a package during business hours, that will be your problem. If a service technician makes an inappropriate comment to a customer in the field, you will hear about it. If your delivery driver clears a parked car, this is your responsibility. If someone slips on your walkway, that will also be your responsibility. That’s why insurance exists. And claims are not abating in this increasingly litigious environment. So meet with your insurance advisor regularly and make sure your coverages are adequate.
Unfortunately, being associated with an unpopular influencer, a controversial event, or a marketing campaign that goes south is also your fault. Pepsi didn’t expect the backlash it received when the company launched a campaign featuring Kendall Jenner, who offered her product to a police officer at a protest as a peace offering. Adidas came under fire when it congratulated customers who ran the 2017 Boston Marathon with the slogan: “Congratulations, you survived the Boston Marathon.” Other brands have been accused of racism, colonialism and other transgressions as a result of their misguided marketing campaigns.
But it is not only the big brands – and their shareholders – who suffer the consequences of their actions. There are many small businesses that make these mistakes. And for us, because of our size, the repercussions are more serious.
A Dallas restaurant chain caused controversy when it implemented a surcharge for employee benefits. Italian restaurant owner ‘sparked outrage’ after posting on Facebook. Another businessman was criticized on social media for trying to scare a homeless person with a hose. There are countless other stories of small businesses that suffered the wrath of Twitter and Facebook for their actions or the actions of their employees; this includes taking a stand on a controversial social issue and losing customers as a result or even being forced to close because of it.
And there are many other stories of business owners who, by trusting too much, had their funds stolen by office managers, bookkeepers, clerks, finance executives and bookkeepers. Maybe they had insurance. Maybe they didn’t. But no insurance will cover the wasted time and anguish of that loss, much less the public humiliation of having to admit to the world that your lack of internal controls got you. And then there are the countless, mostly unreported, small businesses that have suffered major data losses and are facing huge lawsuits from angry customers thanks to their poor network security that led to breaches and ransomware attacks. You also need insurance for all of this.
But the answer is not just insurance. They are internal controls. It is the participation of the management. It’s the care and attention to detail and scrutiny and involvement and all the other things a business owner needs to do to minimize their potential exposure to liability. Alec Baldwin, unfortunately, did not check that the gun he was using in a mock scene contained mock bullets. Maybe it was an honest oversight. Maybe I should have been more diligent. Regardless, he owns the movie production, so he’s hooked.
As entrepreneurs we take risks. Substantial risks. It’s what separates us from employees. An employee can leave a job at any time and get another job. But a business owner can’t do that. We have obligations to fulfill and we are exposed to both financial and legal repercussions for the decisions we make. We never forget it.