6 Things to Consider When Running Your Own Business
Concentrate on the risks of running your own business and exposures for which insurance might be needed.
In the Post Industrial Revolution era, the global economy has developed, if not flourished and has divulged the contemporary entrepreneur of each era in economical activities rich with opportunity, potential and innovation.
The idea of entrepreneurship may emerge as unnerving, yet it has never been more thrilling. As rewarding and beneficial as production might appear, everything has a price. And the price of starting your own business is high risk.
Thus, before you go on about starting your own business, consider the following:
1. Commodity Risks
The entrepreneur must decide what sort of a good or service and of which quality they will sell in the market, with a high demand and attractive price. However, an entrepreneur may need product liability insurance in unpredicted cases of quality negligence (unconsciously), which protects the business from allegation of consumer injuries or product damages.
In order to produce a commodity, the entrepreneur needs to make sure the allocation of premises is efficient enough for the production. The premises, equipment and inventory used for production must be placed in an industrially safe zone. However in cases of a disastrous fire, earth quake or any other natural or unnatural strike of calamity, the entrepreneur will face severe loss. Thus, he must make sure to acquire property insurance policies to protect them from bearing the costs of such mass-destructive events.
However, if an entrepreneur is home-based, they can also qualify for home-based insurance to protect themselves from collateral damage caused by calamities, striking the home premises.
3. Market Risk
The type of consumer targeted by the entrepreneur is important especially to decide whether they are targeting a mass or a niche market and what the consumer expects/needs.
Still, in cases of political instability, the market is adversely affected and due to protests and strikes, the manufacturing, retailing or provision of services may be interrupted. Business interruption insurance counterbalances the loss of income during such crisis for the entrepreneur.
4. Team Risks
The key to an effective and progressive business is effective teamwork and motivated workers. To keep the workers inclined towards hard work, they need to have a safe and sound environment. Immediately, the entrepreneur must acquire workers’ compensation insurance which covers medicinal treatment, injury and death benefits in the event an employee is harmed or passes away as a result of his association with the business.
5. Expansionary risks
As the business grows, it enjoys higher rewards but it also faces some costs. This may include the possibility of failing to deliver an order in time or delivering the wrong service. Professional liability insurance redeems a business against negligence claims due to impairment that results from inability to perform.
6. Personal Risk
As a business owner, instead of being an employee you need to seek out your own insurances for things such as death, disability and income protection. Sometimes you are able to bundle this with your superannuation fund, depending on how you mange your superannuation, you may need to take out separate insurance policies. These are more to protect your family, should you not be in a position to continue bringing in income or are able to continue running your business.
Thus, when considering running your own business, an entrepreneur must asses all the risks and benefits involved along with insurance policies to protect them.