Running a business is one of the most satisfying and exciting jobs that a person can have. For those who love the entrepreneurial lifestyle, nothing else really cuts it. One of the biggest draws that this kind of life has, is the immense amount of challenge and the hope of sweet success and satisfaction on the other side. Now, this is not for everyone, and people who don’t share these passions may hate being in a position like this.
One of the keys to success is doing everything you can to mitigate the possibility of failure. This oftentimes comes down to a lot of hard work, determination, and grit. Careful planning and precise strategy can help resources go a long way, and good management skills can carry a dream into reality. There is one area of focus that everyone should take very seriously when it comes to the success of their company, and that is the issue of business insurance.
If you have been wondering about the importance of business insurance, what exactly it is, and how much of it you need – here is everything you need to know.
What Exactly is Business Insurance?
Put simply, business insurance is a way of protecting the most important components of a business, the people who run them. When it comes to running or starting a business there is considerable risk that is involved. Not only are you signing up for an incredible amount of hard work, but there’s a chance that you could lose a lot.
For the start-up founder, the opportunity to succeed is what drives them, however, the fear of failure is a healthy motivator to keep working even when it’s tough. Business insurance doesn’t negate the possibility of failure, but it protects a business against situations that could threaten to halt operations completely. One of the most important aspects of business insurance is that it helps to protect against the financial fallout of lawsuits.
How Much Insurance Do You Need?
When it comes to building out any kind of business, even non-profit altruistic businesses, growth will attract some kind of trouble. The sad truth is that in every situation it is never ‘if’ trouble will come, but ‘when’. Entrepreneurs and business leaders can’t live in constant fear of the inevitable lawsuit, or allegation, but they can protect themselves so they can stay focused on their mission.
Unfortunately, even the most careful and well-structured businesses can still run into problems that would be hard to navigate without insurance. One question that comes up quite often, is the issue of how much insurance a business needs. Whether you are founding a start-up or taking a chair on the board of an established non-profit, you should always check that insurance is in place.
While the need for insurance might be easy to understand, finding out how much insurance you need can be tricky simply because insurance isn’t cheap. This is a necessary service that you should not operate without, and the good news is that there are flexible plans that can help cover what you need. Insurance is a necessary investment, however, it is not a good investment if it’s covering aspects of your company that don’t quite exist.
What that means, is that you should find insurance that first and foremost fits the size and stage of your company’s growth. This can easily be done, and by doing so you can often find that the amount of insurance you need is something that doesn’t drain your budget.
Always Get the Basics
If your business is board governed, then one of the most basic insurance packages you should have is a D&O (Directors and Officers) coverage. The directors and officers of any business are some of the most important and vital people for the growth and health of the company. When a small business is first starting out, the roles will be filled by people who will most likely also be working in the day-to-day aspects of the company as well. You should never join, or expect anyone else to join, a venture that is board governed without adequate D&O insurance in place.
Fiduciary liability, employment practice liability, and tech errors are other basic coverages that will go a long way to ensure your start-up phase is safe. These packages help take pressure off your plate so you can spend your time focusing on growth and not worrying.
Conclusion: Insurance That Scales With You
The best quality of a good insurance provider is that they will be able to scale with you. Yes, insurance at the very outset over basic liabilities is vital, but only invest in what you need. As you grow, the need will grow, however, the ability to pay for more coverage should also grow. Finding flexible plans and a company that is able to scale your insurance package with you is an important part of any business plan.