Many small business owners are born optimists. But positive thinking can only take you so far. To succeed in business, you also need to think about what could possibly go wrong and seek the help of an expert.
Being in business involves risk. From natural disasters, such as earthquake, fire and flood, to theft or building works on your doorstep that disrupt your trade. It’s impossible to predict, let alone prevent, all future risks. But there are steps that are useful to take to reduce the likelihood of risks impacting your firm.
“Don’t jeopardise all your hard work by failing to take account of the risks”
1. Identify your risks
First, compile a list of risks your business could potentially face. During this process, it’s helpful to tap into the experience of an insurance broker, a business mentor or your business networks. The government also has an online guide to help you assess your business risks, which you can find here.
All businesses are different and so are the risks they face. For example, a power outage could either result in stock losses if you run a retail food outlet and rely on refrigeration or your customers could suffer food poisoning. Or, if you run an online business and your internet connection is down for hours or days, you risk losing business and customer goodwill.
As well as physical risks to your business property, employees or clients, think about potential disruptions to the market you operate in and less tangible things, such as risks to your business reputation.
An insurance broker can work with you, to help identify your insurable risks. With this advice, you can then make an informed decision to find the right cover to protect your business against the unexpected.
2. Managing risks
Once you’ve identified your risks, it’s time to put in place some strategies to manage them. The best time to consider your risk management strategy is when you draw up your business plan. If you haven’t already done so, download a template here. Don’t forget, you will need to revisit your risk strategy and update insurances as your business grows.
You can also cost-effectively reduce some risks with simple actions, such as backing up your computer data, installing smoke alarms or providing your staff with safety training. Likewise you could also consider outsourcing tasks, such as bookkeeping or computer networking, to reduce your risk of costly errors or malfunctions.
You can also buy protection against many business risks through insurance. Speak to your insurance broker for tailored advice.
3. Cover all bases
Most people understand the need to insure their business assets such as buildings, contents and motor vehicles for events such as fire, theft or damage. But business interruption insurance is just as important. This helps cover any loss of revenue if you are prevented from trading due to various unforeseen events, such as where you cannot access your premises due to damage to adjoining premises.
Even if you are working from home, you may need to consider public liability insurance and professional indemnity insurance.
4. Seek advice
Steadfast insurance brokers have in-depth knowledge of insurance products and can suggest a business insurance package tailored to suit your business. This is often more cost-effective than putting together a patchwork of single policies that could leave you exposed.