When you’re in the process of getting your small business off the ground, you might be tempted to cut costs. It’s true: starting a new business is expensive. The Small Business Administration (SBA) estimatesthat new business owners spend an average of $1,000-$5,000 for a home-based franchise. In 2009, the Kaufmann Foundation said the average start-up cost as much $30,000.
There’s a disparity in these findings, so let’s say that the average small business costs somewhere in the middle, say at $15,000 to start.
This may seem low-cost, but keep in mind that this is only to start the business, not to keep it going. Also know that most Americans have less than $1,000 in the savings account, so starting a business would be a huge financial undertaking. If the business should fail, the small business owner doesn’t have their personal finances to fall back on.
Be Prepared…for Workplace Accidents
The costs above don’t include keeping the business going in its first year; the $15,000 is just what it would cost to open your business’ doors. If a customer should slip and fall in your establishment or if one of your delivery drivers should cause a crash, you could be sued or expected to cover the cost of repairs. This article isn’t meant to scare you or have you shy away from fulfilling your dream, it’s supposed to help you get a better idea of what’s involved in being a responsible small business owner.
A lot can happen in the course of a 24-hour day, and if you don’t take precautions, you could be out a very expensive dream. Here are four reasons why you need to invest in a business insurance policy.
- Peace of Mind. A business owners insurance (BOP) policy includes property insurance, general liability insurance and business interruption insurance. This means that if an accident should happen at work, your BOP coverage will take care of the costs. This is why it’s necessary to budget for business insurance. Even though it’s not required by law, it is highly recommended; it could just save your business.
- Protect Your Employees. Workers compensation is another element of business insurance. Not included in a BOP plan, you will need to purchase workers compensation coverage separately, but it’s well worth it. If one of your employees should get hurt on the job, workers compensation will cover their medical bills and pay their salary while they’re home recuperating. If that isn’t enough, workers compensation denies your employees the right to sue you for sustaining an injury at work. In essence, workers comp protects your employees and you!
- Protect Your Clients/Customers. No matter how much you plan or work to prevent an accident from happening at work, it’s only a matter of time before an accident happens. An accident can include anything from a product falling off store shelves, giving a client an incorrect piece of information or a customer slipping and falling in the store. Professional liability insurance will cover litigation and restitution costs if a client should sue your business for providing shoddy advice and general liability insurance will cover you if a client should get physically hurt in your store.
- Protect Your Equipment/Merchandise. If one of your vans transporting product or equipment between locations should get in an accident, destroying the van and everything inside, could you pay for its replacement out of pocket? Probably not. Fleet insurance will cover the damages and property insurance will replace the equipment and merchandise.
You could be out tens of thousands of dollars in your first six months of business if there’s a workplace accident. Or, you could pay a low flat monthly or annual premium to cover all your bases.