The statistics on small businesses can be discouraging as only about half of them stay open past the five-year mark. But that is just the reality of the challenges small businesses face.
No doubt, the risks are many for a small business owner, and any mistake can be devastating. If you have limited resources, absorbing heavy financial blows is going to be challenging.
One way a small business can protect its existence is by getting insured. It’s a necessary expense and one with many benefits.
Let’s look at some of the benefits of insuring your small business.
- Brand Preservation
As a small business owner, you are competing with large enterprises with an edge over you in various aspects. That makes preserving your brand and building your reputation necessary to staying in the competition.
Through business insurance, you can protect your brand name by creating trust with your customers.
Think about it, what is it that customers do when they are not satisfied with a product or service?
They tend to leave negative reviews that harm your reputation. But if your customers come to know that you offer compensation when things go wrong, they will appreciate the effort your brand makes to rectify issues, and that builds trust.
Remember, an insured business assures customers they won’t lose money as their interests are covered.
- Employee Motivation
An insured business can also boost employee motivation at work. That’s because it offers certain protections and benefits.
For instance, if top talents know that you offer a juicy employee benefits package, landing them becomes easier. The employees you already have will also be more comfortable working with you long-term.
You will also be able to maintain employee motivation because such privileges can make your team more willing to go the extra mile.
- Protection from Financial Loss
The most important aspect of having business insurance is the protection it offers against financial loss. As a small business, you most likely don’t have the financial cushion to withstand losses and damages.
Let’s highlight some of the ways business insurance can protect your small business from financial losses.
Accidental Damage
Damages in the workplace happen all the time. You could lose business property like expensive equipment or inventory. Covering such losses is hefty and can be difficult for a small business to bear.
If a fire breaks out in your premises, for example, you could lose everything in an instant.
Business insurance can protect your business against losses and damages that could be impossible to recover from. The thing with accidental damages is that they are unintentional and, therefore, unforeseen. The only way to protect against that is by getting insured.
Theft and Vandalism
Burglars and other lawless characters are more likely to target a small business than a large company because they think it would be easier to get away. Unless your small business has invested heavily in state-of-the-art security measures to discourage crime, it’s best to get the forms of business insurance that cover them.
Natural Disasters
It’s impossible to keep your business safe from a natural disaster. When an earthquake or a flood occurs, your business may sustain severe damages that may lead to financial ruin.
However, if you’re insured against natural disasters, any damage your business suffers will be compensated.
Expensive Lawsuits
Insurance can help cover the expenses resulting from lawsuits against your business. A client or even an employee may file a legal claim if they have suffered harm or damage to their property.
These lawsuits can be extremely costly and can put you out of business if you don’t have a business policy to absorb those expenses.
Business Disruption
Your daily business operations can be disrupted for many reasons. When that happens, you lose revenue and even customers. It can be tough for a small business to get back up without financial support from a business disruption policy.
4. Legal Compliance
Getting insured is sometimes a requirement before you can legally operate. For example, any business in America that has employees is required to possess these forms of business insurance:
- Workers’ Compensation Insurance
- State Unemployment Insurance (SUI) and Federal Unemployment Tax Act (FUTA).
- Disability Insurance
Some states make it mandatory to buy certain policies as well, but these laws vary by state. Buying these compulsory policies protects your business from legal penalties.
Conclusion
Business insurance is a necessary investment for small business owners. While the cost of getting adequate insurance can seem high for small businesses, having it is way better than risking heavy losses.