Being a business owner can provide a sense of freedom, but it also comes with a lot of responsibility and its own forms of stressors. Many times, new small business owners don’t know where to begin and often times make mistakes that could be costing them profits or even business. So, here are a few mistakes that a small business owner may be making and what to do instead.
1. Rely Solely on Homeowner’s Insurance
Small business owners, especially those who work out of their home may think that since their home is insured or they have liability coverage that their business is covered. In reality, any damage or injuries that occur because of your business are not covered under your homeowner’s insurance policy. Business activities are all excluded from all homeowner’s insurance policies. If you plan to operate some or all of your business from your home or even store business equipment at your home, then consider the following business insurance options:
- Business Personal Property Insurance
- On Premises Liability & Off-Premises Liability
- Errors and Omissions Coverage
2. Not Having Loss of Income Coverage
For many small business owners, the business is their sole source of income and may be a major contributor to the family’s financials. In the event of a disaster (like a fire or flooding from a hurricane) that prevents your business from operating, Loss of Income Coverage, or Business Interruption Insurance, will help cover the cost of financial loss your business experience when it can’t open its doors for business. Loss of Income Coverage can help your business to pay the bills, rent for office space, pay invoices for supplies, and even employee wages.
3. Skipping or Skimping on Key Employee Insurance
For most small businesses, the owner IS the business. Without you, there is no business, or in some instances without a particular employee, part of your business or services it offers cannot be completed. Key Employee Insurance provides a benefit, paid to the business, to cover the financial loss of a key employee. The money can be used to continue regular business operations until a new head of the company is found or can be used to pay off any outstanding debt (like unpaid invoices) and close the business properly.
4. Not Buying Disability Insurance
It is a statistical fact that a disability is more financially crushing to an individual and their family than a death is. The number one reason for home foreclosure is because of the financial loss following a disability, whereas death, is listed at number four. Although you may believe that your job is not a high risk and that you are unlikely to become disabled, a third of the workforce is injured badly enough that they are disabled for three months or more. And for many, the injury was not work related. Accidents can happen anytime, anywhere, and to anyone. Being on a disability insurance plan is a smart decision to protect yourself from a possible accident.
5. Paying Too Much for Coverage
Shopping around for insurance is important. Don’t just go with the first insurance agent or company that pops up on Google. Do your research and find yourself reasonable insurance at a reasonable rate. Our independent insurance agency has access to over 100 carriers – we have the plan and the premiums that are right for your business. In fact, we can save many of our business clients up to 37% on their insurance premiums.