Ask SCORE: Develop a plan to protect your business
Posted on Friday, November 25, 2022 at 8:40 pm
Ask Dean Swanson’s SCORE
Even the best risk prevention plans are not infallible. Natural disasters, freak accidents, and a whole host of unforeseen events can limit your ability to run a business if you’re not prepared. This is the final column in a series of three on the topic of protecting the investment you have in your business.
You invest a lot of time and money in your business, so you owe it to yourself and your company to develop a business continuity plan that will give you a plan to keep your business running during a crisis.
When creating your plan, consider including the following:
Identify the scope of your business: What would prevent your business from operating as usual? What steps can you take to address them? Identify the most important business functions and teach other employees or a partner how to perform them.
Prioritize business needs: Document your needs based on the business scope results and then identify gaps in your strategy to meet those needs. Always make sure at least one person knows where your company’s insurance information is located.
Create a plan: Organize a “recovery team” for the worst case scenario; write business continuity and IT disaster plans and document manual solutions in case you need them. Back up this information in both a physical and digital location so you can continue essential business functions.
Celebrate, proclaim, practice: Regularly review and practice your contingency plan with your employees. This will give you an opportunity to review any potential holes in your plan, as well as give everyone a chance to practice what to do in the event that the plan goes ahead.
Maintain and update: Review your plan every six to 12 months to make sure it’s still up to date. Make sure any growth or change in your business experience is reflected in your plan.
Business contingency planning doesn’t just provide peace of mind. It also forces you to identify and assess potential risks. This can further aid your risk prevention efforts and also help you determine what insurance coverage you need to protect your business.
Why do I need business insurance? Insurance is a key part of your business. From protecting your delivery vehicles to your business personal property, getting the right coverage for your small business can protect you in the event of a loss.
Even if you’re simply running a home business, your homeowners policy likely doesn’t provide coverage if a client is injured while visiting your home office.
Additionally, if you violate a law you are unaware of, such as OSHA or intellectual property law, your business may be vulnerable. Business insurance, on the other hand, can help provide the protection you need.
What types of insurance does my business need? The answer can be complicated. A more detailed answer to this question can be helped by a detailed conversation with your agent, either by phone or in person. In general, here is a list of the most common types that are needed.
General liability insurance: This is often known as business insurance and is a basic policy. General liability insurance can cover third-party damage and property damage, personal and publicity damage, and legal costs.
Policy of business owners (BOP): BOP usually provides general liability protection with the added benefit of protecting your assets. If you run a small to medium business that requires both liability and asset protection, you should consider business owner policies. Larger businesses are usually not eligible for BOP because they need more extensive property coverage than these types of policies offer.
Professional liability insurance: This cover protects against claims of professional negligence, such as giving wrong advice or failing to deliver a service. It is usually needed by client-focused firms in the event that the client is not satisfied with your firm’s work and is suing.
Commercial car insurance: If you use your vehicle for business purposes, you probably need commercial auto insurance. This includes transporting clients or conducting normal business affairs.
Employee benefits: Workers’ compensation covers injuries, medical bills and lost wages for your employees if an incident occurs while on the job. Most states require certain small businesses to have this type of insurance and it will cover employees regardless of their negligence. It does not apply to the employee if the injury occurred outside of working hours.
Cyber insurance: Cyber insurance covers damages in the event of a data breach, such as data recovery software and business interruption costs. Cyber insurance may also include coverage for third-party damages in the event of a breach or cyber incident involving a client or customer. In addition, it can cover the cost of legal fees and settlement costs following a data breach.
Commercial property insurance: You should consider this coverage if you operate your business from a physical location outside of your home. Protects your building and personal business property from things like fire, weather damage and vandalism. Coverage for your property can be purchased separately or as part of BOP.
Dean Swanson is a SCORE Volunteer Certified Mentor and former SCORE Chapter Chair, District Director and Regional Vice President for the Northwest Region.