Being a Small Business owner myself, I can speak about it through my experiences and throughout the statistics. “One out of every four businesses are forced to close because of a disaster and never reopens”.
You can have a great business plan and countless marvelous ideas, but there are things that you cannot control such as natural disasters, economic failures, emergencies and others. For those and other risks, it is important to have a Small Business Insurance Policy.
You have to ask yourself, what happens if I have an accident and I become disabled, will my business continue to generate income to support my living expenses? Am I going to be working from home, or I am going to buy or rent an office or store (depending on the type of business you have)? What type of protection do I need and what will it cover? How can I recover from spoilage or inventory loss, or loss of power and not being able to communicate with customers? Am I going to have employees? What happens if they get injured in the job? What is in it for me when I decide I don’t want to work anymore? Is there something to protect me against lawsuits due to mistakes or miscommunication?
It is all about insuring the risk properly. I suggest you find an insurance professional that can identify your needs during the course of a simple conversation, where the insurance agent can give you options and recommendations to better protect you, your family, your business and tailored to your business nature. For example: If you work from home, is there any policy endorsement that can add the protection for my business property? Or if you are using your vehicle to conduct business, is your insurance provider adding protection or increases the limits of liability, or classifies you as a “Business use”, or “Commercial vehicle”? What level of liability protection do you need?
It is important also to know before hand, the type of business structure you are (do you have a legal partnership, LLC or Corporation, or are you a sole proprietor). You always need to plan the growth of your business, and project the future. If you have a partner and you want to separate from him/her or the partner dies, how are you going to manage the loss? It is good to know that there are many options that can help you, sometimes you will need a legal or tax expert’s advice, but also consider a buy-sell agreement with life insurance (A Buy-Sell Agreement is a legal document between a potential buyer and seller of a business interest at the death, disability or withdrawal of an owner, shareholder or partner).
This is what I call one of the most efficient ways to prepare a backup plan for my small business. It is good to consider and schedule an initial and then, an annual review with your insurance professional to determine your needs-asset protection as those may change from year to year.