Starting your own business can be an exciting processHowever, when focusing on developing products, networks, and clients, many small business owners tend to overlook the importance of financially protecting their business until it’s too late.
At a phase where funds are needed for business development, you may be left with no choice but to pay exorbitant fees or claims to overcome your lack of foresightSeeking professional advice and getting the right type of business insurance in Melbourne from the get-go helps protect your business against many common mistakes that usually happen when you first start.
In this article, we will share a few tips on protecting your small business for it to survive and prosper in the long run.
Table of Contents
Identify Potential Risks
To protect your small business, you must first identify and access the potential risks and where they might come fromThus, you can take on specific business insurance to cover those factors.
Every business should have a policy package that is uniquely customised to meet its needsThese policies should cover a wide variety of potential outcomes ranging from faulty equipment and process and damaged premises to public liability and professional indemnity, as well as the loss of supplies and key employees.
Once you have identified the risks, you can speak with an experienced insurance provider on getting the insurance best suited for your type of businessThis may include personal accident and sickness insurance, property and assets insurance, and key man insurance.
Ensure you Have Sufficient Coverage
Typically, your insurer will help you determine the coverage level for each policyTo help you decide the appropriate level of cover, you will need to assess the impact the event you are insuring against would have on your small businessAt this point, you can exclude certain risks from your cover if you think they do not pose a significant threat to your business.
It is essential to have sufficient coverage since the insurer will reduce the amount they paythe percentage of the cost you had not insured the item or person forFor example, if you had insured your product for 90% of its value, you would only get back 90% of the value of your claimBeing underinsured against something is just as risky – and ultimately a waste of money – as having the wrong type of insuranceHence, it is best to seek professional advice on the right type of policy coverage for your small business.
Renew Your Policy Regularly
It is important to regularly review and update your insurance policy, especially when your business grows or changesAs time passes and business expands, there will be a wider range of risksNewer products, services, and people can bring about unexpected changes and needs – ones that were not covered in your initial policies.
If possible, go through the first step of identifying potential risks every time your business implements or introduces something newThis reduces the hassle and speeds up the process of renewing your policies regularly as you already have the information your insurer needs to make the necessary changes.
Manage Your Risks
Although your insurance provider can help identify the risks you may face in running your small business and provide relevant financial protection against unexpected setbacks, managing your risks well can help reduce costs that your policy might not coverThis may include your insurance excess, bad publicity, inconvenience, and fines.
By developing ways to either eliminate or control the risks you have identified, you can prevent setbacks from ever happening in the first placeFor example, to reduce the risk of theft, you should take necessary steps to secure your business premises, not leave cash at the premise outside business hours, and many more.
For every type of risk your business faces, you should draw up an action plan so that, if problems do arise, the damage is minimisedYour plan should include:
- key procedures for employees.
- contingency plans to minimise injury and business disruption.
- a list of important contacts, such as emergency services.
In addition, just like your policy, monitoring and reviewing the effectiveness of your risk management systems ensures your workplace is always safe as your business grows and changes.
Keep Tax Implications in Mind
As important as it is to ensure you get all the right insurance policies for your small business, you should also consider the tax implications it may haveEnsure your accountant assesses all taxation matters, including premium tax deductibility and any potential Capital Gain Tax or Goods and Services Tax issues.
Engage an Experienced Financial Advisor
This article is merely a general guide on how you can safeguard your budding businessIt is best to seek advice from an experienced financial advisor to determine the best type of insurance for your businessThe right insurance experts will also offer tailored guidance on ways you can protect your small business, such as managing your potential risks.
