Optimism drives the entrepreneurial spirit, so it isn’t surprising that most small business owners consider themselves optimists. Too much optimism, though, can get a small business owner into trouble. A business plan built solely on the “best case scenario” is like a house of cards—one gust of wind (or fire or lawsuit) and the entire business can come crashing down. That’s why smart business owners temper their optimism with a healthy dose of reality. In other words, they learn to manage risk.
The first step in implementing a comprehensive risk management plan is identifying potential risks. To help you get started, we have provided a list of the top 7 threats facing small business owners. Is your business protected? Do you need some help? Contact Roper Insurance now for a free risk assessment review to make sure your business is protected and prepared.
Protecting your Property
Property holdings are often a small business owner’s largest asset. So, it’s important to make sure your property is protected. Begin by taking a complete inventory of all your assets to assess your risk & your insurance needs. Property coverage can be customized to your needs, but a typical policy provides replacement cost value for your building and actual cash value for your business property.
The U.S. Department of Labor estimates that more than 40 percent of businesses never reopen following a disaster such as a fire or flood. Is your business prepared to weather the storm if disaster strikes? If a fire causes your premises to be temporarily unusable, what would you do? Ideally, you would move to a temporary location while your permanent facility is repaired, but traditional Property Insurance does not cover this move or the loss of income while the permanent business location is being repaired. Unprepared businesses often completely shut down. To mitigate this risk, consider adding Business Interruption coverage to your Property Insurance policy.
No matter how well you plan, running a small business includes unexpected surprises—the only way to completely avoid liability is to close your business. Smart business owners protect their assets l Liability Insurance coverage. These policies provide coverage for claims of bodily injury or other physical injury, personal injury (libel or slander), advertising injury and property damage as a result of your products, premises or operations.
Key Person Losses
Many small businesses are built around the talents and expertise of a few individuals. If an employee crucial to the functioning of your business departs unexpectedly due to death or injury, would day-to-day operations continue as usual or would disorder and uncertainty ensue? Would you be able to maintain your current level of performance and current revenue stream? How would you cover for the financial loss of the employee or pay for a temporary replacement during his or her recovery? Key Person Insurance can help you answer these questions with confidence and provide financial stability in a time of stress and uncertainty, allowing you to keep your business moving forward without missing a beat.
Injuries to Employees
Small businesses have the same responsibility to indemnify workers who are injured or become ill during the course of their employment. Many businesses do not realize the effect workplace accidents can have. Beyond initial treatment costs and lost production time, on-the-job injuries have an impact on insurance premiums, which can increase your costs for years to come. By promoting safety, it is possible to control workers’ compensation premiums. Having the proper pre- and post-accident procedures in place can drastically reduce the severity of a workers’ compensation claim, and implementing a comprehensive safety program can reduce the accident rate. Roper Insurance can help you create and implement safety programs in your workplace.
Managing Electronic Data and Computer Resources
Small businesses often lack a formal IT department or even simple internet security measures, which leaves them vulnerable to unscrupulous cybercriminals. With an estimated liability of more than $200 per compromised record, the cost of a single data breach can be devastating for a small business. If your business stores customer records electronically, it is crucial that you have robust security measures in place. In addition to preventive measures to reduce Internet-based exposures, specialized technology coverage such as Cyber Liability Insurance, can help protect your business against damage from cyber attacks, data breaches and other Internet-based exposures.
From the pre-hiring process until the final goodbyes, you are at risk. Three out of five employers will be sued by a prospective, current or former employee. Although many lawsuits are groundless, defending them is costly and time-consuming. Can your business afford to defend itself against accusations of wrongful employment practices? If not, there is an insurance solution called Employment Practices Liability.
Insurance is a key component of any comprehensive risk management plan, but successful risk management also involves prevention, training and contingency planning. Contact Roper Insurance & Financial Services today at (303) 721-1145 to learn more about the tools and resources we can offer to help you manage risks, control workers’ compensation costs, advance safety and boost employee morale.