When you run a small business, you’ve got a lot on your plate. In addition to selling your product or service, you’re also managing vendors, hiring workers, overseeing ever-changing technology needs, and much more. With everything you’re juggling, it’s not uncommon to slip up here and there.
However, with a little planning — and the backup of good business insurance — you can be prepared for these common mishaps that could affect your bottom line.
Mistake: Treating your home-based business too casually. If you work from home, it’s easy to forget that your company needs the same care and attention as if you were working from a professional office. For instance, do you have a dedicated workspace — other than your dining room table or a nook in your master bedroom? You may also want to carefully consider your company’s legal structure, such as whether you should be a limited liability company (LLC) or corporation instead of just a sole proprietorship. And, when it comes to insurance, don’t make the mistake of assuming your homeowners insurance will cover your home business. Most homeowners policies typically don’t cover home-based businesses losses, according to the Small Business Administration (SBA). You’ll likely need a special rider or a separate business insurance policy to cover your business property (such as your computer, furnishings and inventory) and liability risks, the SBA says.
Mistake: Not staying on top of cyber security. No matter how small your business, you probably store customer information on your business computers. If you accept debit/credit card payments, you also have financial information that could be intercepted by computer hackers. You should have a solid computer security plan in place, as suggested by the Federal Communications Commission (FCC). You may also want to consider carrying data compromise coverage as a backup. If you experience a data breach, this coverage could help reimburse your costs for recovering important data, notifying your customers of the breach, offering them credit-monitoring services, and more.
Mistake: Assuming that employees are “like family” and will never sue you. Even if you know your workers well — or they’re family members and friends — you should always treat them professionally and lawfully. That means making time to familiarize yourself with the latest employment laws, as outlined by the Equal Employment Opportunity Commission (EEOC). Just one claim of employee harassment, unlawful termination or other incident could financially cripple a small business. For this reason, you may want to ask your business insurance agent about employment practices liability coverage. If a current or past employee were to sue you, this coverage could help pay your legal costs and any awarded damages.
Mistake: Not developing a disaster/business continuity plan. How would you run your business if a fire destroyed your building and computers? Would a smaller glitch like phone lines being down put your company out of commission for more than a day or two? Disaster plans aren’t just for big corporations — your small businesses needs a “what if” strategy, too. The Insurance Institute for Business & Home Safety (IIBHS) offers a business continuity planning kit to help you get started. You might also benefit from carrying business interruption coverage. In case of a “covered event” (which is defined in the insurance policy you choose), this coverage could help temporarily replace your business income. In the case of major damage, it could also help pay for you to rent office space and equipment in another location while your primary business space is being repaired, according to the Insurance Information Institute (III).
If you need help deciding what kind of insurance will help cover your company’s most common mishaps, contact an experienced business insurance agent.
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