Beware These 4 Risks of Giving Business Advice
Giving out business advice can be risky for all parties involved. And yet, it’s a reality almost everyone in the business world lives in, especially those in the career of business consulting. Some people mess up in such a big way, it’s almost unbelievable, as evidenced by the man who accidentally told a company to price a product at production cost, costing the company money and crashing the economy of the industry for six months. Here are four risks of giving out business advice, and why you might want to consider investing in professional indemnity insurance.
The Risk of Giving Out Legal Advice
One of the biggest risks of giving out business advice is if that advice happens to be legal in nature as well. While in some countries, such as the UK, legal advice can be given out by anyone, in others, such as the United States, only a licensed lawyer can give out legal advice at all. Even in the United Kingdom, people giving legal advice can be held legally liable for that advice, so caution is certainly in order.
The Risk of Destroying Your Professional Reputation
Giving poor business advice can damage or even destroy your professional reputation. This risk is especially prevalent early in your career, where one misstep can ruin perhaps all future opportunities. If you’re very unlucky, a client might tell other businesses not to hire you or leave poor reviews online in addition to never hiring you again. Even as an established professional, bad advice is a blot on your record and will make other companies think twice about hiring you.
The Risk of Losing Money
Losing your reputation as someone who dispenses good advice means less clients will be interested in hiring you, which means less money. It won’t just be you who is adversely affected, but one or even more businesses could lose revenue as well, which can even affect the economy.
The Risk of Sabotaging Relationships
Another obvious consequence of giving business advice is the risk of destroying a professional relationship. Even if it’s been built up for years, a relationship can crumble if one party causes the other to lose money or face because of an error. Even personal relationships can be affected by bad business advice. This is more likely when going into business with a friend or family member, or when a business owner who is a friend or family member asks you for advice.