Over Easter there was a large fire at Coorparoo in Queensland, where a number of small businesses were burnt out. This is a devastating event for any business, but what made it more so was that a number of the small businesses were not insured.
What was the effect? Let me tell you about one small business and the effect this has had on them. This small business was a service business; they were starting to get a brilliant reputation in the industry and had a number of major contracts on the go. They had employed a number of staff to work in the business and things were looking rosy.
Insurance was on their to do list, but as things got busier and busier it never seemed to make it to the top of the list. As their information was critical to their business, they regularly backed up all of their computers.
Then the fire struck and the business was totally burnt out. All the computers melted and as they did not take the back-ups off site, the back-up system was also melted. All of their data disappeared in a puff of smoke, as did all of their client files, project notes, fixtures and furniture.
Instead of generating income, they now were faced with additional costs of trying to recreate their data from their memories and from clients. Their employees suddenly lost their jobs as the company could not afford to keep paying them with no income coming in, and their big contracts looked very shaky.
To make it worse the principal of the business was 6 months pregnant. She is now faced with the very real and hard decision of whether or not to close down the business or to try and start it all again from scratch at a time in her life when she should be slowing down. At the moment she is working from her kitchen table and still sorting out her needs and priorities.
What would you do in her situation?
Why don’t small businesses get insurance? When talking with them I hear 4 common excuses:
1. Too expensive – we can’t afford it now
2. (For home based businesses) Doesn’t my house insurance cover me?
3. I am getting to it
4. I believe in the law of attraction – I won’t buy into the fear of insurance
All of these excuses are very limiting and will cause your problems. If you believe business insurance is too expensive start to add up the costs of starting from scratch. Also look at the message you are putting out about the value you place on your business and how important it is to you.
For a home based business – no your general home insurance does not cover your business. In case of theft, fire or other disaster your business and computers will all disappear not to be replaced.
If you are getting to it, what will it take you to move it up your priorities?
In terms of the law of attraction if you focus on the loss of your business, yes you could be creating a problem. However, the law of attraction does not say ignore the problem. All of the best teachers suggest you need to be conscious of potential issues, take steps to offset the risk and then don’t put any more energy into worrying about it.
By taking out insurance you think about the problem once and then forget about it until you need it. By not taking out insurance you carry a permanent low level concern that maybe your business will be broken into, burnt out or otherwise challenged. I can tell you which is more likely to generate the result you don’t want to get!
There are many business insurance policies out on the market, each of them different and with different inclusions and rules. If you are not comfortable with researching the policies, you may want to think about an insurance broker to help you find the right cover for you.
So what should you insure?
Assets – you need to insure your assets against things like fire, theft, storms etc.
Other things you may want to consider include business interruption insurance (covers you in case your business is interrupted because of damage to your property as well as cover to rewrite material if your back-up didn’t recover effectively etc), insurance to cover you if an employee embezzles or misappropriates money, machinery breakdown and vehicle insurance.
One of the things to remember is that most policies don’t cover your laptop or mobile phone. They need to be specified in order to be covered so double check this with your insurer.
People – if you employ people you need to ensure they are covered with workers compensation and superannuation, but if you are self employed you may need to consider personal accident and injury policies to cover you in case of your own illness, injury or death.
Liability – This is an area that many small businesses don’t consider, but missing this out can make you bankrupt if a claim is made against you.
With liability you need to include public liability covering your business in case you cause death or injury to someone. This can come from something as simple as someone slipping on a mat in your home, or someone tripping on your briefcase at a coffee shop when you are meeting a client.
Professional indemnity protects you in case someone acts on your advice and this causes a loss to their business as a result of this advice. Product liability covers any injuries or loss arising from people using your products and the products being faulty or causing an injury.
Aside from insurance you also need to put in place some simple routines such as a minimum of a weekly computer back-up that is stored off-site.
For critical paper documents you may want to consider installing a fire-proof safe or filing cabinet in your office but don’t use these to store your computer back-ups in as they will generally melt in a fire.
Insuring your business success is an issue many small businesses don’t think about until it is too late. Use the Easter fire as a message for your own business, double check your policies are current and effectively cover what your business needs and schedule in an annual check to ensure you are getting the best deal from your insurance.
