Optimism is the fuel that drives entrepreneurs, so it isn’t surprising that most small business owners consider themselves to be risk takers. But taking too many risks can be costly. As a small business owner positioned for growth, it’s ideal to be aware of the most common risks facing your business so that you can be better prepared for them when they come your way.
The top 5 small businesses risks
Is your business prepared if a weather storm strikes tomorrow? Do you have a loss prevention plan in place in the event of a fire? Does your insurance policy cover temporary relocation? These are all situations that put your business at risk of incurring losses. Ask yourself: will my business be able to survive a disruption? In most cases, having protection helps. Consider adding business interruption insurance to your property insurance policy, which covers operating expenses and lost income in the event something happens to your permanent business location.
The best companies today can afford the best defences, and as these larger enterprises get better at defending against cybercrime, cybercriminals are moving down the business food chain and targeting small businesses who cannot afford sophisticated security investments. Today, small businesses are the preferred targets for cybercriminals. When cash flow is limited, spending on security suffers and their vulnerability increases. Obtaining cyber insurance, as well as taking preventative measures to reduce Internet-based exposures, can help you reduce the risk of becoming a target for cybercriminals.
Lack of legal expertise
Many first time business owners may not have the expertise to evaluate every detail of each contract they have to sign or they may overlook something by mistake. These oversights, however, can lead to problems down the road. Legal expense insurance can save you from accepting additional risks from suppliers or customers. It covers you against the potential costs of legal action brought by or against your business. This simple decision can save you money in the long haul – both in legal fees as well as insurance coverage.
Protecting your property
Many small businesses operate from a home office, and a home is often one of the biggest assets a small business owner owns. If you’re a small business owner with home insurance, know that most homeowners’ insurance policies don’t automatically cover business-related damages or losses that occur in a home office. You’ll need to get small business property and general liability insurance to protect yourself against any business-related claims, such as slip and fall and theft. Conduct an audit of your assets to see how a loss might affect your business, and to assess what type of coverage you’ll need to repair your property and replace your possessions.
No matter what you do, you’re likely to incur a loss during your business’s lifetime. Unfortunately, there isn’t a full-proof safety net around liability, but there is protection. Commercial General Liability (CGL) insurance provides coverage for damages that your business may be found to be legally liable for, which are typically caused by bodily injury or property damage to third parties, including when you and your staff are conducting business off-site.
Insurance is a key component of every business plan. By understanding these small business risks, you can take steps early on to manage the above risks and protect your property and possessions when disaster strikes.