Protect It or Regret It: Power Moves That Prevent Business Losses

Welcome to Your Business, Accelerated! Digitally remastered with AI, Your Business, Accelerated! is the go-to podcast for entrepreneurs ready to scale smart. Hosted by Attorney Shaune B. Arnold, it delivers strategic business insights, legal frameworks, and real-world solutions to help you operate with clarity and confidence. Get actionable guidance to protect, grow, and optimize your business…one smart move at a time.

In this must-hear episode, Attorney Shaune reveals four crucial ways to shield your business from costly losses. From rental car disasters in Waikiki to force majeure clauses and FOB terms, you’ll learn real-world legal insights and practical tips to stay protected, profitable, and confidently in control. 

Transcript

Hello everyone, and welcome once again to your business accelerated. My goodness, I am your host, attorney, Shaune B Arnold, and I'm just so happy that you're here this week and every week, and I have a lot of exciting information that I want to share with you this evening. But first, I want to make sure that you understand that I am a California business attorney, a Los Angeles attorney, to be exact.

I work in Los Angeles, and to the extent that we talk about legal issues here on your business accelerated, like risk of loss and mitigation of damages, is often a subject that attorneys engage in with their clients. …so, to the extent that we enter into those kinds of conversations here on your business accelerated, I want to make sure that you understand that it's all coming from the perspective of a California business attorney. You may have to take it to an attorney in your jurisdiction to find out whether there are any real differences between the law where I live and the law where you live. So, that's very exciting.

I also want to invite you to listen to my other podcast, legal biz Café. On legal biz cafe, we deal with your mindset as an entrepreneur. We deal with the issues that stop you and stymie you as an entrepreneur; that make it difficult to function, and it just makes serving your business more of a drudgery than a joy.

We deal with those issues. Together, your business accelerated and legal biz Cafe give you two sides of the same coin. They fill you out as an entrepreneur. So, I'm excited to give this information to you each and every week. I invite you back again next week, and we'll see what we have in store.

So, let's just get right to it and talk about several different ways to avoid losses, either entirely or to mitigate damages if you do incur losses in your business. And, you know, I really do mean any kind of loss.

Let's start, for example, with an insurance conversation. We're all familiar with auto and life and home insurance, but there's an array of insurance products that you need as a business owner. I'll give you a perfect example.

I took a business trip to Hawaii. I was on the island of Oahu. As I stood at the counter, I got a little angelic tap on my shoulder that said, “Get the LDW protection.” …That's the Loss Damage Waiver, …and that's actually a contract, as opposed to insurance.

I said to myself, “There's no way! ...That's going to cost me $120 more money at the end of the trip. There's no way I'm going to do that.” I got an energetic slap to the back of the head. And when I get energetic slaps to the back of the head, I tend to listen. I bought the LDW protection, the lost damage waiver.

Folks, a few hours later, the car was gone, stolen in the middle of Waikiki. At roughly three o'clock in the morning, when we finally gave up looking and decided, yes, the car is indeed gone, we consulted a nearby policeman who said, Oh, it's probably on the floor of some chop shop by now. They're going to put it on a cargo container, send it off to a foreign country and put it back together on the other side. That car is gone.”

The lesson for me was to ALWAYS listen to my first mind and my energetic slaps to the back of the head. The lesson for you is get the insurance, because you never know when that unexpected tragedy is going to strike, and it really could have been a tragedy, but instead, at three o'clock in the morning, I called the rental car company and told them that the car had been stolen.

The woman that answered said, Well, there's nothing we can do for you, unless you can bring us back keys.”

I responded, “Honey, the keys are all I have left.” She said, “Then come on in and get another car.” The next morning, I went down to the rental company. I gave them the keys. They gave me a set of keys to a new car. I never had to think about that lost rental again.

Now, in truth, the LDW is a contract, that’s different from the insurance. If I had taken the insurance or used my own insurance, then I would have had to deal with the whole claims adjustment nightmare, and this way I was able to just walk away. I mean, it literally does mean you can roll a car in a ditch and walk away from it, not on purpose, of course, but you get what I mean. 

That is how important insurance is. As a business owner, you want to plan for the unexpected. If you are a service provider, like an architect or a lawyer, you must get errors and omissions insurance. If you are a director in a company, directors are potentially personally liable for the things that go wrong in a corporation. Did you know that?

Yes, your directors and officers insurance will pay your lawyer fees, and up to the policy limits if you lose, where the company was sued and you are named personally in the lawsuit.

If you have a brick and mortar business, then consider commercial general liability insurance (CGL). That helps you if somebody falls down and hurts themselves in your business. You want to protect your property so you insure it.

You might consider getting some umbrella coverage. If what you do is complicated, has a lot of moving parts, or needs a lot of different types of insurance. I invite you to contact a competent insurance professional and sit down with them and talk about all the moving parts in your business, and they will be able to tell you exactly what type of insurance you need.

But this is very important to prevent losses. By “prevent losses” I mean, if you do have a loss, then the insurance will make you whole again. It mitigates damages.

Anyway, I don't know what the rental car went through, but I walked away from it. So that's, to me, an avoidance of loss. I want you also to consider getting key person insurance if you are a company that has a number of employees, because if something happens to the key person, if they get on an airplane and it goes down, or if they have a heart attack, a stroke, a car accident, you understand what I mean. If something happens and they become incapacitated, you've got mouths to feed. You want to make sure that those mouths get fed. Get key person insurance.

The second way to avoid loss in your business is to make sure that you look at your manufacturing contracts. If you deal with inventory, the delivery of inventory, make sure you look at the freight on board, or “F.O.B.” language. This language tells you where the risk of loss changes hands from seller to buyer. Is it at the manufacturer's facility? Is it at the seller's dock? Is it in the middle of the ocean? Is it at the buyer's facility? Is it at the dock on the buyer's end? Where exactly at the dock? Make sure your insurance dovetails with that language.

Note that your FOB language may not comport with their FOB language. You need to visit that issue and make sure both sides understand and that your insurance company understands where the risk of loss changes hands.

The third tip I have for you tonight on avoiding loss, either entirely, or mitigating your damages, is to put a force majeure clause in your contract. A force majeure clause means if something happens out in the world, that is out of the contract performer's control, like a strike, riot, war or invasion, the existing contract will toll, and no performance will be due thereunder, until the conditions are resolved.

The force majeure clause would operate to keep you from being in breach of contract while you go negotiate that new contract, or while the circumstances beyond your control that stopped your performance remain. You have to plan for the unexpected. The force majeure clause would allow you to do that in case something happens and it's not your fault. That's very important.

The fourth tip tonight on avoiding losses, either entirely or, on mitigating your damages, is to have a warranty clause in your contract that ensures that your purpose is adhered to. For example, if you sell somebody a chair, is it reasonable that they might stand on it and reach for something, because if it's a little tiny, rickety chair that's intended for a child or a doll, then maybe it's not strong enough for them to stand on. And you know, you should put that in your contract or on the product itself. I know we've all seen these ridiculous little stickers that say, you know, do not use the hair dryer in the bathtub. But here's the thing, ..somebody used the hair dryer in the bath and the manufacturer got sued. It really did happen.

So, that's why the manufacturer puts the sign on a hair dryer. Don't use it in the bathtub. It seems silly, but it's important. So, make sure the language is in your contract regarding the purpose for your goods. You are not warranting any other use, but this use, and also you want to think about the time limits that your warranties beyond which they should expire. Is it a year? Is it three months? Is it 30 days? Consider that and make sure that you put that in your contract, because you don't want to have to them take back goods that work because of normal wear and tear, somebody thinks you should take it back, and now you have a problem, you can avoid that entirely by putting that language in your sales contract, either to the as a manufacturer, to the wholesaler, or to the retailer or directly to the public in whatever language, whatever contract you deal with, and you should deal with a contract if you have goods.

Ladies and gentlemen, I want to thank you so much for tuning into this week's episode of legal biz cafe. I am your host, attorney Shaune B. Arnold. I encourage you to follow me on Facebook, LinkedIn and Twitter X. In all of those places, you can find me as Shaune dot Arnold. In the meantime, …and in between time, …I am reminding you, …as always, to MAXIMIZE your COMPETENCE, to get the CONFIDENCE YOU NEED to succeed.

I'll see you next week right here on Your Business Accelerated. Bye-bye, friends.