Not all small businesses face the same types of threats to their profit margins. Still, every industry does face a variety of risks that need to be considered to maintain the smooth operation of the company and ensure its success over time.
Businesses that are reliant on bank loans will be sensitive to changes in interest rates. Some companies need to crack down on fraud. Others are more concerned about legal payouts due to customer liability claims, loss of equipment due to theft or fire damage, or the devastating effects of natural disasters (such as a global pandemic).
More than most, small businesses are at risk. They don’t have the same resources to safely handle unexpected disasters and recover in the same way larger, established companies can. With small businesses, a catastrophe such as theft or fire damage may have the potential to shut down operations altogether.
The trouble is that business insurance is not always a requirement for small businesses, and so, for the sake of a modest premium, many owners opt to take their chances. But when customizable business insurance is an option, small businesses can tailor an insurance policy solution to cover the exact risks and threats they face, keeping costs low while maintaining essential coverage. Here’s why your small business needs customizable insurance:
1. Small Businesses Can’t Afford to Overpay
If 2020 has taught us anything, it’s that the unexpected can and often does happen. Nobody expected to have to effectively close their businesses for months this year, but our current crisis has necessitated just that, leaving some small businesses unable to ever reopen.
Cash flow is a persistent struggle for small businesses who need to cover basic running costs. Payroll, rent, business taxes, vendor invoices, and the purchase and maintenance of supplies and machinery are just some of the overheads small companies need to handle on a monthly basis.
One study found that only half of small businesses have a cash buffer to last 27 days if cash flow stops, which is bad news for businesses that have been stuck with limited or nonexistent operations during lockdown.
According to a 2018 small business accounting survey, 35% of small business owners reported that unforeseen expenses were their main financial challenge. And in our current situation, it’s easy to see why.
With this in mind, small business owners are trying to cut costs as much as possible, both during the pandemic and in normal circumstances when they still face other hardships and risks. When penny-pinching becomes a necessity, it’s easy to see why small companies simply can’t afford to overpay on insurance policies, and owners are loath to spend money to support any aspect of an insurance plan that isn’t absolutely essential for their business.
Customizable insurance allows businesses to identify the most important aspects of the business and cover those, thereby reducing the cost of extraneous insurance coverage.
2. Small Businesses Can’t Afford Inadequate Coverage
As tight-fisted as small businesses and startups are forced to be, on the other hand, they can’t afford to skimp on necessary insurance coverage, either.
When it comes to insuring the business against losses, some small business owners look at the numbers and think they are willing to take the risk to save the money. But this quick decision could break the businesses altogether. When the unexpected does inevitably occur, business owners without insurance don’t have anywhere to turn.
Contrary to popular belief, small businesses are not too small for insurance. It’s estimated that only 4 out of 10 small businesses have insurance in their first three years, but according to some data, one in three faced a catastrophe that could have led to an insurance claim within the last year.
Claims on property damage, client disputes, and employee injuries ranked high on that list. A single claim can run into the hundreds of thousands, leaving uninsured businesses in danger.
And liability claims such as employees slipping on loose carpet or hurting their back while lifting a heavy object, falling from ladders, or being scalded by a hot drink can be as expensive as they are unanticipated. They can threaten the revenue and the future of a small business, so every business (independent of size) should have insurance covering these types of claims.
That’s why customizable insurance can offer the best of both worlds for small businesses: small businesses can find coverage that’s affordable, but still insures all the essential areas that leave a business open to risk.
3. Different Companies Have Different Needs
Different-sized businesses and different industries face a variety of different risks. Small businesses face threats from liability, property and equipment maintenance, while larger businesses are more concerned with changing technologies and limited resources. And industries, such as restaurants, pharmaceuticals, or real estate, can pose specific challenges.
Too often, insurance policies don’t account for the various needs of different industries and instead merely offer broad policies that can be hit-or-miss. This is very inefficient, especially for small businesses who can see the value of insurance but may not have the budget to cover it. Working with an experienced insurance professional in your field is the best way to identify the main risks affecting your industry and tailor a solution to best fit your needs.
Bethany Insurances works with small business owners across a variety of industries to help them get the customized, affordable small business insurance they need.