As an entrepreneur, there are lots of day-to-day stresses that probably keep you up at night, and the last thing you want to think about is the possibility of a bigger disaster hitting your business. To stay productive - and sane - you shouldn’t spend too much time imagining and fearing the worst, but you also don’t want to ignore the very real threats to your livelihood. To find some balance, you can educate yourself on common threats to small businesses and take the necessary steps to ensure you are protected. In all cases, there is an insurance plan that will act as a safety net for your business while you get back on your feet.
Threat #1: Property Damage or Loss
Your business’s property is also probably one of it’s biggest assets, and damage to or loss of the property would strike a blow to your enterprise. You can protect your property with cameras, lighting and by ensuring you’re meeting all safety and fire codes. You’ll also want to have an automatic backup system for your technology and information. But because no plan is fail-safe, you will need to have property insurance to cover the property itself and the contents inside.
Threat #2: Business Interruption
In the event of a disaster hitting your business, you have more to worry about than just damage to your property and contents. If you can’t reopen your doors soon after a disaster, you’ll also suffer from lost business. Ask yourself, “how many months could my business survive without any earnings?” Create a backup plan for office accommodations and brainstorm ways you could keep your business afloat during an interruption - like creating an online store or selling product out of a partner’s location. In addition, business interruption insurance coverage will reimburse you for lost income and extra costs during an interruption to your business.
Threat #3: Liability Losses
As a business owner, there is no way to completely avoid liability. If you’re selling a product, you could be held liable if it’s defective or causes serious harm to someone. If you’re offering a professional service, you could be held liable for errors, omissions or negligence in your service. And in every case, you could be held generally liable if someone injures themselves on your property or if you damage a customer’s property. Even if you are working from home, you could be held liable if someone visiting your home for business purposes (like a courier) slips and falls. You might be surprised to learn that your home insurance might not protect you in that kind of scenario. Depending on your business, you will want to investigate product liability, professional services liability and general liability insurance options.
Threat #4: Cyber Attack
You might think your business is too small to be the target of a cyber attack, but the reality is that small-to-medium sized enterprises are particularly vulnerable to attack because they lack the resources of a large IT team to protect them. If you’re dealing with online sales and confidential customer data, you are at an even higher risk. Educate yourself and your employees on how to spot and react to fraudulent purchases (for example, unusually large orders of expensive merchandise) and how to avoid phishing scams. In terms of insurance coverage, a cyber liability plan will protect you in the event of a lawsuit stemming from a breach to personal or commercial information.
Threat #5: Key Person Losses
A small business often means a small team, meaning that if a critical member of your employee base falls ill or passes away, your business could experience a significant setback. Take a look at your current team right now and ask yourself, if you were to unexpectedly lose one of these people (and their skills or value could not be easily replaced through hiring), could your business operations continue in their absence? If the answer is no, now might be the time to consider some internal training and knowledge-sharing to make sure everyone’s role could be covered if something were to happen to any of them. Depending on the individual’s importance to your business, you could also have them covered under a key person insurance plan.
Assessing the threats to your business can be scary and disheartening, so don’t let fear paralyze you from taking action. If you are properly prepared and insured, you’ll be better able to respond to a threat and maintain the health of your business. Create a risk management plan for your business, and do some research on the best types of insurance to cover you in the event of one of these disasters. Make sure you are shopping around for quotes from insurance providers so you can get the best coverage for the best price.
Guest Post By: Ari Rush