– 11 –
Limiting your liability and protecting your
assets for
your manufacturing business
A manufacturer, almost more than any other type of
business, must take liability issues into account in consider-
ing the type of business entity to establish and the type of
insurance coverage to maintain . Manufacturers just have a
lot more to worry about, including the potential dangers in
a manufacturing workplace and the harm that may occur to
consumers using the manufactured products .
First, when setting up any business, you will generally want
to protect your personal assets from potential liability
resulting from the obligations of the business . Because of
the higher risks of liability in manufacturing, protecting your
personal assets is all the more important . Typically, a corpo-
ration or a limited liability company entity type is chosen
for doing business . These forms
of organization provide
the most complete protection from personal liability for the
obligations of the business .
To protect the assets of the business, you will want to have
insurance that will protect the company from potentially
devastating tort claims . In product liability cases, a company
can be held strictly liable for the safety of its products .
Defects in either the design or the manufacture of the
product can result in substantial claims if people are harmed
as a result of using your products . Even an insufficient
warning about the potential dangers of a product can result
in strict liability for any harm that results from its use . Thus,
getting adequate product liability insurance is essential as
you start up your business, in addition to all the usual types
of insurance purchased by small business owners .
Finding
other manufacturing
information resources
When you are just entering into a new business venture,
especially one that can be as complex as manufacturing,
you want to gather as much information as you can to
identify the steps for getting started . Resources are readily
available
through industry organizations, and you’ll find
many members of the industry eager to assist you as you
enter the field .
Perhaps your best first stop would be your state manufac-
turers’ association . For networking with other manufac-
turers and for more focused assistance on issues in your
geographic area, the state or local associations may be
able to provide more of the help you need . Next, you can
find helpful information on a
national level through the
National Association of Manufacturers,
www .nam .org
. You
may also find some useful information and contacts at the
Association for Manufacturing Excellence,
www .ame .org
.
Another important contact to make as you are starting your
new business is with your state’s or city’s economic develop-
ment department . Most of these departments have units
specifically assisting small businesses as they startup opera-
tions . They can provide information regarding incentive
programs, loan and grant programs, and tax benefits that
may be available as you begin your new business . Often,
they can provide incentives for locating a business within
their city or state . They can identify enterprise zones or TIF
districts where there are favorable tax consequences for
setting up a business .
Manufacturing and Services (MAS) is a unit of the
International Trade Administration within the U .S .
Commerce Department . It is dedicated to enhancing the
global competitiveness of U .S .
industry, expanding its
market access, and increasing exports . On its website at
www .manufacturing .gov
you can find links to assistance for
manufacturers offered by the federal government,
state
and local governments, and industry associations .
– 12 –
Once your manufacturing enterprise is up and running,
don’t begin to think that your work is over . It’s really just
begun . And if you want to maintain and grow your business,
you will need to stay focused on continuing improvements
to your products and your process .
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