If you have a small business, or are starting a small business, then as an owner you are naturally optimistic about your business future. Whilst “positive thinking” is great, it can only take you so far. To succeed in business you need to have in place a risk management plan to ensure you are covered when things go wrong. A commercial insurance broker can help you with this as they are experts in risk assessment
you don’t invest in risk management, it doesn’t matter what business you’re in,
it’s a risky business.”
All business involves risk. There are a number of factors than can impact your business, such as environmental risk (earthquake, fire or flood), operational risk (the council undertakes road works right outside your store and your clients cannot get to you) or shrinkage risk (employee theft). These are just some of the risks a business may face. You obviously cannot predict or protect against all future business risks. You can however take the following steps to minimise the likely effect of risks negatively impacting your business.
1 Identify your Business Risks
Business risk refers to any threat to your business that will not allow you the ability to achieve your financial goals, so the first step is to compile a list of risks your business could potentially face.
It is useful, at this time, to tap into the experience of a commercial insurance broker, a business mentor, or your business networks. The government also has an online guide to help you assess your business risks
As every business is different so are their risks. If your business is run from home then the risks are quite different from those small business owners who have separate business premises.
Ensure you consider all your business risks. It is important to consider both the tangible risks to your business property, employees, or clients and the intangible risks that may cause disruption to your market or damage your business reputation.
You may find it helpful to grade your risks:-
- Very likely to occur
- Some chance of occurring
- Small chance of occurring
- Little chance of occurring
A commercial insurance broker is a good investment. They 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. They can also review your current risk management strategy to ensure all your risks are covered.
2 Manage your Business Risk
Once you have identified your risks, it is time to put in place some strategies to manage them. The best time to consider your risk management strategy is when you draw up/review your business plan. If you do not have a business plan you can download a template
Don’t forget, you will need to revisit your risk management strategy and update your insurance as your business grows.
Risk prevention is the best insurance. You can 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 commercial insurance broker for tailored advice.
3 Consider all your Business Contingencies
Most people understand the need to insure their business assets for events such as fire, theft or damage in relation to their business buildings, contents and motor vehicles. Business interruption insurance is just as important, although quite often overlooked. This will help keep your business running when you have an unexpected setback. It minimizes the financial impact on your business when interruption occurs, such as where you cannot access your premises due to damage to adjoining property.
Even if you are working from home you may need to consider:-
- Public Liability Insurance: this covers the cost of legal action and compensation claims made against your business if a third party is injured, or their property suffers damage whilst at your business premises or when you are working in their home office or business property
Professional Indmenity Insurance: protects your business and staff against any financial losses or legal action taken against your business for services or advice you have provided
4 Minimise or elimate your risk – seek advice
GYB commercial insurance brokers have an 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.
Every business is different and so are the risks they face
Don’t jeopardise all your hard work in your business by failing to take account of all the risks. With a bit of thought, and help from experts, you can put a plan in place to help you bounce back if disaster strikes.