What Kind of Business Insurance Do You Need?
Business insurance is one of those gray areas. Do you need it or don’t you, and, if so, what kind? For certain businesses – for example, amusement parks and health care related industries – it’s an absolute necessity from the get-go, but what if you run a freelance business or engage in low-risk work? Is business insurance a requirement?
While it may not seem so from the outset, as your business grows and takes on additional risk, business insurance quickly becomes a must. The problem is that many smaller businesses ignore the issue of insurance until it’s too late.
One reason for this is that many small businesses often assume that by forming a Limited Liability Company (LLC), they’ll be afforded protection in the event of a lawsuit. However, while this structure can protect you from personal liability for business decisions or actions of the LLC – the liability protection is limited.
For example, if you inadvertently break intellectual property laws or are sued by an employee, you could face a lawsuit and potential losses that being an LLC cannot protect you against.
Of course, LLCs aren’t the only business structure that can benefit from business insurance. Sole proprietors, partnerships, S-Corps and Corporations all need insurance.
But what kind of insurance do you need? Here are four forms of coverage that you should consider (over and above healthcare insurance and any employer insurance obligations):
General Liability Insurance – This is the silver bullet for protecting you, your business and your employees from any damages incurred as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.
General liability insurance is often sold as a catch-all and includes numerous add-ons that you can tailor to your business and its degree of risk. For example, if non-paying clients are a concern, you can add accounts receivable protection to your policy. Inland marine coverage is another option that can protect against loss or damage to business property when it’s not on your premises.
It’s also worth noting that oftentimes a client will request evidence of your certificate of general liability before doing business with you – another good reason to secure a policy before it holds up any potential new work.
Property Insurance – Whether you own commercial real estate or run a home-based business, protect your assets and the equipment, fixtures and furniture inside it. Property insurance is often rolled into general liability insurance, check with your broker to be sure. Home business owners should also be aware that home insurance doesn’t always cover home-based business losses. You may need to add additional riders to your home insurance policy or get other insurance to cover additional risk.
Professional Liability Insurance – Also known as errors and omissions insurance, this insurance protects against errors, malpractice and negligence in the provision of services to your customers. This is often recommended to businesses who provide services such as tax or financial advice, as well as physicians (who are often required by state law to carry this insurance).
Product Insurance – This protects businesses that manufacture, distribute and retail products against any financial loss incurred as a result of a defect product that causes harm or injury. Product insurance can also be tagged on to a general business liability insurance policy.
The Bottom Line
Insurance can be a confusing business. A good insurance broker can help demystify this process and put together a package based on your unique needs. Once in place, don’t forget to keep your policies current and under review (for example, if you take on employees or new assets).
Check out SBA’s Business Insurance Guide for more information and some useful tips on buying insurance.
Disclaimer: The information in this blog does not constitute legal advice. Seek the services of a lawyer if you have any questions about business liability.
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5 Scary Excuses That Are Keeping You from Starting a Business (But Shouldn't)
Are you thinking about starting a business?
If you’re like many people, starting a business is a cherished dream. Sure, you can see yourself doing what you love and creating something for yourself and your family.
But maybe the actual step forward eludes you.
What’s stopping you is fear. It’s understandable to be apprehensive about such a large investment of time and money with no guaranteed success, but these fears must be overcome so you can at least give it a try.
Here are five fears or excuses that shouldn’t keep you from realizing your dreams.
1. “I Don’t Know Anything About Starting a Business.”
At one point in your life, you didn’t know how to tie a shoe, but you didn’t let that stop you. Knowledge can be attained. There are books, blogs, magazines, continuing education courses, webinars, workshops...a whole world of knowledge out there for the taking. But you have to take initiative and decide you want to sharpen your skills and expand your knowledge of running a business.
And here’s a little secret: many entrepreneurs don’t have experience or knowledge running a business when they first start. You’ll learn through experience.
The key is to harness your fears and turn them toward action. Start educating yourself, and take action so you can learn more by doing.
2. “What if I Don’t Make Enough Money to Pay My Bills?”
This is an understandable fear. You want your business endeavor to be successful, or at the very least, not put you in a hole you can’t dig out of. If you’re looking for a guarantee that you will make a profit and be successful, no one can provide that.
But here are a few options that other entrepreneurs have taken to mitigate the financial risk.
- Set aside 6-12 months’ worth of living expenses first in a separate “start my business” bank account. In addition to the money you’ll need to launch and run your business, you need to cover your personal expenses. Since you’re not guaranteed income, this will help fill in the gap until profits come in. This gives you breathing room to build your business.
- Another option is to continue working your steady job while you launch your company. When you’re making enough money to pay your bills, you can quit and run the business full time.
3. “I Can’t Compete with Existing Businesses.”
Well, with that attitude, you won’t succeed! It’s like that saying, “If you think you’re wrong, you’re probably right.” Success in any facet of your life is about having the right attitude.
Find a unique angle your competitors are overlooking. Study their sites, their shops, their products, their marketing, and figure out what they’re overlooking. Then own that niche. Every industry has lots of players. Usually there’s more than enough business to go around, if you can spot an underserved niche or do something better.
Small businesses are uniquely positioned to go after narrow niches, because larger businesses might find them too small to be attractive.
4. “I Fear Failure.”
Running a small business is a risky venture. There’s no guarantee you’ll succeed, let alone make it through the year. Knowing this, you’ve already uncovered your worst fear. Now itemize what you fear could go wrong. You could run out of money. Lose all your customers. Not be able to find good employees. Once you shed light on the specifics of your fears, they’re easier to conquer.
5. “This Isn’t the Right Time.”
Life will always get in the way of you starting a business. So don’t let it. Realize there is no ideal time, so just pick a date, plan ahead, and go for it. You’ll be bound to make a few mistakes along the way, so pick yourself up and learn from them, then move forward.
Starting a business isn’t for everyone, but unless you really examine your reasons for hesitation, you can’t know if you’re well suited for it or not.
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Learn, Develop, Grow – Free Online and Offline Small Business Training Opportunities
Running a business is a fulfilling endeavor, but it often leaves very little room for self-development and on-the-job training.
In fact, finding the time to develop and hone your business skills is probably not top of your list of priorities, but it should be.
One of the best, and simplest, pieces of advice I’ve been given as a business owner is to make a habit of attending at least one relevant webinar or online learning course per month. Whether its tips on how to do a better job of marketing my business or staying on top of the changes to tax law – free online classes are a great way to keep your finger on the pulse of your industry and business.
But where do you start, and how do you find free courses that are relevant to your needs?
Check Out the SBA Learning Center
Research proves that small businesses want fast access to relevant and trusted information that can help them make informed decisions about starting, running and growing their businesses. With a goal of providing small business owners with fingertip access to free, helpful and reliable training opportunities, in 2012, SBA launched its Learning Center.
Since going live, the site has grown to feature nearly 150 self-paced online courses, videos and web chats hosted by industry and government experts. Topics include starting and managing a business, financing, marketing, taxes, government contracting and more.
Content is filtered by topic, so no matter the stage of your business, or the kind of insight you need, you can quickly get answers.
For example, if you’re wondering how SBA loan programs work or just need a primer in accounting or small business taxes, check out these self-paced online financing courses and short videos. Or explore tips from the pros in these archived SBA Web Chats.
New courses are added all the time, including how to establish values for your business and what is intellectual property and how do you protect your ideas?
More Trusted Online Training Options
The Learning Center isn’t the only hub of learning. Here are a few other useful resources to explore:
- SBA YouTube Channel – Here you’ll find SBA’s archived how-to webinars from its regular webinar schedule as well as online courses from National Small Business Week. Sign up for the SBA Weekly Updates (at the top right of this page) to learn about upcoming webinars.
- SCORE – Sponsored by the SBA, SCORE is a small business mentoring organization and you’ll find many interesting webinars on their calendar featuring real-life business use cases and practical tips. SCORE also offers a free email advice line. Simply type in your question and a SCORE mentor will contact your directly to see how they can assist. This is a great option for getting answers to those one-off questions that perplex you.
- BusinessUSA – Bookmark BusinessUSA.gov’s events page. This site filters online and in-person small business webinars and trade events that are taking place across the country. It also offers access to online training seminars from the IRS and other agencies.
Get Training and Help Offline
Your personal and business development doesn’t have to stop at your desktop. SBA also offers in-person training, counseling and access to business development specialists through its SBA District Offices. In fact, SBA’s Local Assistance programs also include targeted help for women business owners, veterans and businesses interested in exporting.
Local Small Business Development Centers are located in hundreds of cities and towns across the U.S. and are another valuable source of counseling and in-person seminars.
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The Power of Words in Business
Words can be a very powerful tool. They can help you connect with customers, assist in negotiation and, ultimately, they can help you build your business. That’s why it’s vital to pick your words wisely.
Sometimes otherwise great words and phrases lose their meaning. They get so diluted by overuse that they end up meaning nothing at all. And that’s why it’s important to track how we use them in business.
Choose your words carefully
I first noticed that phenomenon back in the early 1980s with the phrase “user friendly,” as in “user-friendly” software. That phrase was so attractive to users and advertisers that publishers swarmed all over it. Within a year or so, “user friendly” lost all meaning. Ironically, lots of software, then and now, is actually user hostile. But we in the industry had to look for different wording. That phrase was empty. We all laughed at “user friendly.”
I’m happy to report the pendulum has finally swung back again so that it’s quality of content that matters, not quantity. Word quality is up.
And isn’t this awesome? When I was a kid, “awesome” was reserved for a very few things that truly inspired awe, like Yosemite Valley, the Grand Canyon, and the powers of God (or gods). Hurricanes and earthquakes were awesome. Awe was the active word. You could look it up.
I wonder how much we were all influenced by one particular sportscaster (Howard Cosell) who liked to call a really good play awesome. We had awesome tackles and awesome catches. Whether it was that in particular, or just evolution, awesome now means “good.” Or even “nice.” We have awesome sandwiches, awesome suggestions and awesome t-shirts.
Are you using meaningless phrases?
Think about some of the business phrases we use all the time. How quickly our words can lose meaning. Nobody thinks inside the box anymore. There are no worst practices, not even intermediate or common practices – just best practices. And good luck with the basic math of giving 110% to anything you do. Even when the hold time is half an hour, the menu is nine levels deep, and the answers scarcer than user-hostile software, we are still told, as we’re waiting, that customer satisfaction is that organization’s #1 priority. It’s hard to image what customer service would look like if it weren’t a priority.
Stay clear of content-stuffing
There was another ugly trend a couple of years back called “content-stuffing.”
At one point, it seemed like sites rushed to stuff their pages with junk content — much of it meaningless words and robot-generated SEO garbage — and were rewarded with better rankings in Google searches, and more traffic and sales.
Lots of bloggers went nuts, throwing up any old error-filled, half-baked, two-paragraph post, just to have a post every day of the week. Having boatloads of content was important!
I think we all saw how that was working. I particularly hated the fly-by-night blogs that would steal content and traffic by just copying stuff and filling it full of useful keywords, mucking things up for those of us who actually wanted useful content.
Eventually, so many sites did the junk-content thing, website readers got hip to it and stopped visiting these sites. The sites quickly lost their credibility. Rankings for junk-post sites went down.
The days when blogs could be sloppy, half-thought-out pieces written in 10 minutes and still succeed are over.
A new era has been born and valuable content and word choice is king. It’s not about quantity any more. It’s all about quality.
I hope so.
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