Is Insurance Just Another Brick In Your Business Wall?
You probably already know the statistics regarding the survival rate of start-up businesses, nearly 80 percent of small businesses don’t survive the first three years. Only 5% of online businesses survive that same period.
In the words of Professor Julius Sumner Miller, Why Is It So?
Firstly, it might be too easy to set up a business in this country. The World Bank Study that researched 189 different economic regions suggests Australia was the 7th easiest place to start a business and the 4th easiest to get credit. We have very few start-up barriers and on average it takes just 2 days to get up and running. With the reach and power of internet and social media you can grab the attention of potential customers very quickly and there is a generation of people now looking to ‘get rich quick’. Their impatience often means they pull the trigger without getting professional advice and their business is built on rocky foundations.
Laying the foundation ‘bricks’ of your business is critical and they include the right business structure, appropriate insurances, the most suitable accounting software and a business plan that incorporates a marketing plan and cash flow budget. Entrepreneurs in a hurry often bypass the stage of seeking sound professional advice yet the consequences of the wrong tax structure, inadequate insurance or not getting legal advice can be catastrophic. In this blog we are going to specifically examine the importance of having the right insurance coverage for your business.
Another Brick In the Wall
When it comes to insurance, a lot of business owners think like Pink Floyd, “All in all it's just another brick in the wall”. However, your choice of insurance is a key part of your business foundations. For business start-ups, insurance can seem like just another expense in a long line of costs. However, if your business, car, tools or trailer is uninsured you may never recover from an event like a burglary, flood, fire or act of vandalism.
The first question is - Do you have the right type of insurance for your business? There are a number of insurance types to consider including:
• Public liability to cover customers, clients and visitors to your business
• Cover for contents, equipment, stock, furnishings and fixtures
• Professional Indemnity for a service industry
• Motor Vehicle and Trailer if you are mobile
• Income Protection
• WorkCover (if you have staff)
• Life Insurance
The second question is - How much insurance coverage do you need? Being under-insured can have disastrous consequences for a business owner. You need to carefully review the amount insured on each of your policies on an annual basis if not more regularly. If there is a significant change to your business during the year, either in turnover, stock value or building replacement costs, be sure to disclose this to your insurer and change the level of insurance cover.
You should discuss your insurance options with us or a broker before you open the doors of your new business.
Starting a business is a bit like a game of chess, to succeed you need to make the right opening moves. That includes building your business on solid foundations including the right insurances. If you’re thinking of starting a business the expression, 'people don't plan to fail, they just fail to plan' serves as both valuable advice and a warning for impatient entrepreneurs. Talk to us today and let’s make sure your foundations are rock solid.