The Biggest Mistake You Don’t Know You’re Making
Spend Money To Save Money
The biggest mistake most founders make in the early stages of their business might surprise you. This mistake is usually the decision not to spend money. This might seem counter-intuitive, as the main focus of any growing business is to keep financials in check. Generally founders do this by cutting expenses, not adding them. However, most new businesses tend to avoid the one expenditure that, if cut, may actually cost them more in the long run. This expenditure is business insurance.
While not the most glamorous item on your to-do list, business insurance is the one expense most businesses fail to realize they absolutely must incur. In fact, by not including this expense, companies risk even greater loss. This is because every business, regardless of size or level, is liable should even a minor calamity befall it.
Ever the risk-takers, many entrepreneurs and business owners think of themselves as exempt from scary situations that are all too common. While forming an LLC might protect the individual founder or owner, it will not protect the business itself. In our overly litigious society, it is in a founder’s best interest to “CYA” or, more politely, cover his or her rear end. Findlaw.com has an extensive list of situations that may occur in their article, “Why You Need Business Insurance” including the following scenarios:
-While driving a client from the airport to a meeting, one of your employees hits a guardrail and injures himself and the client.
-You arrive at work [home offices included] one morning to find that all of your computer equipment has been stolen.
-One of your employees leaves a coffee maker on and it burns down the building where you lease office space.
Reading through these and many other scenarios they present should highlight the necessity of a solid foundation of insurance upon which your business can thrive.
Three Steps To Business Insurance
Now that you are thoroughly convinced of the necessity of business insurance, how do you get the best ROI? In many cases you are legally required to obtain specific kinds of business insurance. Knowing which kinds and what they do will ensure you maximize the benefits. Follow these three steps to simplify the process:
- Know Your Coverage
Unfortunately buying insurance is not as simple as picking a box up off the shelf. There are many different types of insurance a business may need, all with their own benefits and possible legal requirements. Before you reach out to brokers, do a quick Google search of each kind of insurance to find out what is available and what is covered by each. Ultimately, your needs will depend on where you are in your business. The five following types of insurance are a good place to start with your research:
-Directors & Officers Insurance
-General Liability Insurance
-Employment Practices Liability Insurance
-Errors and Omissions Insurance
-Cyber Liability Insurance
Depending on the kind of business you own, you may also want to explore what is covered by Property Insurance, Product Insurance, Professional Liability Insurance, Workers Compensation Insurance, Cyber Liability Insurance, and Key Person Insurance.
- Find Your Broker
It is important to find a business insurance broker who can match your needs right now, but also stay with you as you grow.
We recommend utilizing technology to help you understand your costs and needs. EGFS partner, Embroker, pairs an online platform with the expertise of brokers. Companies have cloud-based access to all insurance policies and can compare quotes as well as insurance premium data of companies similar to yours.
Every insurance organization has its’ own flavor to offer. Research and reach out to a range of brokers, so you have multiple quotes to review in the next and final step.
- Review Your Quotes
When making key financial decisions, such as purchasing business insurances, professional guidance can be helpful. A financial expert or CFO will be able to look at this expenditure, as well as the many others on your balance sheet, and give you the professional support and guidance you need to help make the best decision. When you have your quotes and you are ready to review them, seeking out our professional assistance can be the difference between a good choice and a great one.
EGFS Has Your Back
Knowing what kinds of business insurances are available, as well as what they cover, will ensure you maximize your ROI on your business insurance investment. Following the three steps listed above will ensure your business’ financial security in the event of potential incidents.
EGFS is here to help. Reach out to us before making any large purchase to ensure you receive optimal professional guidance focused on increasing your total ROI.