Some Types of Insurance You Need to Protect Your Business

From the day an entrepreneur starts a business, he exposes himself to certain risks. Even before the first employee is hired, a business is at risk, making it important to have the right insurance in place. One lawsuit or catastrophic event could be enough to wipe out a small business before it even has a chance to get off the ground.

1. Professional liability insurance.

Professional liability insurance, also known as errors and omissions (E&O) insurance, covers a business against negligence claims due to harm that results from mistakes or failure to perform. There is no one-size-fits-all policy for professional liability insurance. Each industry has its own set of concerns that will be addressed in a customized policy written for a business.

 2. Property insurance.

Whether a business owns or leases its space, property insurance is a must. This insurance covers equipment, signage, inventory and furniture in the event of a fire, storm or theft. However, mass-destruction events like floods and earthquakes are generally not covered under standard property insurance policies. If your area is prone to these issues, check with your insurer to price a separate policy.

3. Workers’ compensation insurance.

Once the first employee has been hired, workers’ compensation insurance should be added to a business’s insurance policy. This will cover medical treatment, disability and death benefits in the event an employee is injured or dies as a result of his work with that business. Even if employees are performing seemingly low-risk work, slip-and-fall injuries or medical conditions such as carpal tunnel syndrome could result in a pricey claim.

4. Home-based businesses.

Many professionals begin their small businesses in their own homes. Unfortunately, homeowner’s policies don’t cover home-based businesses in the way commercial property insurance does. If you’re operating your business out of your home, ask your insurer for additional insurance to cover your equipment and inventory in the event of a problem.

5. Product liability insurance.

If your business manufactures products for sale on the general market, product liability insurance is a must. Even a business that takes every measure possible to make sure its products are safe can find itself named in a lawsuit due to damages caused by one of its products. Product liability insurance works to protect a business in such a case, with coverage available to be tailored specifically to a specific type of product.

6. Vehicle insurance.

If company vehicles will be used, those vehicles should be fully insured to protect businesses against liability if an accident should occur. At the very least, businesses should insure against third-party injury, but comprehensive insurance will cover that vehicle in an accident, as well. If employees are using their own cars for business, their own personal insurance will cover them in the event of an accident. One major exception to this is if they are delivering goods or services for a fee. This includes delivery personnel.

7. Business interruption insurance.

If a disaster or catastrophic event does occur, a business’s operations will likely be interrupted. During this time, your business will suffer from lost income due to your staff’s inability to work in the office, manufacture products or make sales calls. This type of insurance is especially applicable to companies that require a physical location to do business, such as retail stores. Business interruption insurance compensates a business for its lost income during these events.

By having the right insurance in place, a business can avoid a major financial loss due to a lawsuit or catastrophic event. Check with your insurer to find out what forms of insurance are advised for your type of business and put those plans in place as soon as possible

Know More About Business Interruption Insurance

The Chatham, N.J., resident, who operates three ecommerce websites selling sportswear, was reimbursed for $10,000 in storage and relocation costs after an early winter snowstorm in 2011 caused a week-long power failure and melting snow endangered $50,000 of inventory stored in her basement.

This fall, Superstorm Sandy brought a prolonged power failure that shut down Dorst’s customer-service lines, causing sales to evaporate. She’ll also see lower sales because of a month-long delay in the delivery of next season’s styles. Fortunately, her interruption policy will reimburse the profit Dorst lost because of those missed sales.

“That was real money last time, but nothing compared to what I’m going through now,” she says.

 Unlike Dorst, most business owners don’t have interruption insurance, says Richard McGrath, independent broker at McGrath Insurance in Sturbridge, Mass. Cost may be a factor in why entrepreneurs pass on such coverage: Policy prices range from $750 to $10,000 or more, depending on business size.

But businesses may want to reconsider interruption insurance given the rising number of natural disasters. The annual total has increased from 400 major incidents in a typical year to more than 600, according to a recent survey from global insurer Allianz.

Before getting interruption insurance, here are some issues to consider:

Common limitations
Most standard business insurance policies cover only loss or damage to tangible items — your equipment and inventory and your warehouse, office or store — and not lost profits if your business cannot operate.

To get business interruption coverage added to your business policy, you’ll need to document your current net income. If your net profits are substantial, beware of low per-incident limits — $30,000 per incident is common – because they might cap your coverage far below the amount you’d need, McGrath says.

Related: Picking up the Pieces: Sandy’s Impact on Small Businesses (Photos)

If your company is growing quickly, document many months of profits to demonstrate that income is accelerating. If you suffer an interruption, this will allow you to project that income would have continued to grow. Otherwise, the insurer may limit your coverage to the amount of the past year’s profits, says Bob Freitag, a public claims adjuster at AmeriClaims in Indian Trail, N.C.

Next, carefully note the types of interruptions you want to cover. Your interruption coverage will mirror what you covered in your main business policy, Freitag says. If you didn’t include flood coverage in your general policy, for instance, you won’t have interruption coverage for flooding, either.

Note that loss of utilities is often excluded from standard interruption policies, especially downed electric transmission lines — the very issue that has bedeviled East Coast business owners post-Sandy. If you want that covered, Freitag says, you will need to add a rider to your policy.

Calculating coverage
To figure out your ideal coverage amount, you should envision how your business would be affected by a catastrophe, McGrath says. To start, examine all the costs that would continue even if your business couldn’t operate, such as loan or lease payments and taxes. Also, note charges that might cease, such as utility service to a destroyed building.

If you would want to keep workers on the payroll while you rebuild your factory or store to avoid losing skilled labor, your insurance should reimburse you for their salaries.

Additional coverage
Even standard business interruption coverage doesn’t take care of every possible disaster cost. If you leave a destroyed warehouse and rent one that costs more, interruption insurance will cover only the old rate, McGrath says. Likewise, building replacement may be more expensive than expected due to new codes and modern materials costs. To cover these, you need an “extra expense” rider, Freitag says. It’s that type of provision that reimbursed etailer Dorst for the cost of moving her inventory in last year’s storm.

Your business is also at risk when related businesses are affected by disaster. For instance, an explosion at your website host’s server farm could take your site down or a key supplier may be unable to deliver if it’s wiped out in a hurricane. These events hurt your financial results even though your facility may be undamaged. “Contingent business” insurance covers your lost profits in these disaster scenarios, McGrath says.

Getting reimbursed
Insurers will generally exclude the first few days after a disaster from their calculations, so put aside what you’d need in cash to cover those costs, Freitag says. Then, furnish your insurer with extensive documentation of your lost profits. Consider saving your records electronically off-premises or storing printed copies elsewhere, so you’ll still be able to prove your losses even if your main facility is destroyed

Home Business Need Insurance

Driving to clients’ homes always made Brandi Greygor nervous. As the owner of Sassy Mama Boutique, Greygor often drove as much as $10,000 in women-and-kids’ clothing and accessories to home parties and exhibition halls. She would set up merchandise, which then sat overnight unattended before an event took place.

“That $10,000 of wholesale merchandise is $20,000 to $30,000 of income, if I were to lose that,” says Greygor, who is based in Union, Ky. Her 1-year-old home-based business was uninsured for more than nine months until April, when her worries about her risks led her to purchase insurance coverage.

 Sassy Mama’s story is a common one. Sixty percent of home-based businesses lack adequate business insurance, according to the Independent Insurance Agents & Brokers of America, based in Alexandria, Va.

Related: How to Create a Productive Home Office Space

One reason owners forgo insurance is confusion over what may be already covered by a homeowner’s or a renter’s policy. But most home-business owners have little or no coverage from their homeowner’s policy. What’s more, if you file a homeowner’s (or renter’s) claim for losses sustained by a previously undisclosed home-based business, your insurer may refuse to cover it or cancel your policy, says Ryan Hanley, an insurance agent at Murray Group Insurance Services in Albany, N.Y. At best, you might receive a small reimbursement.

“People do not realize that if the UPS guy comes to your door with a business package in his hand and slips and hurts himself, there is no coverage for that injury in their homeowner’s policy,” Hanley says.

If you’re doing business at home, you’re smart to have insurance. The amount of your sales doesn’t matter. The amount of loss you could face should something go wrong is what counts.

So how can an entrepreneur protect a home-based business? Start by insuring your business right away. You can choose from one or more of these three basic types of insurance, depending on your business’s complexity and type.

1. Rider to a homeowner’s or renter’s insurance policy
The most inexpensive home-based business insurance is an add-on or rider that expands a homeowner’s or renter’s policy to cover the company. The cost of such a rider is minimal — perhaps $100 a year — but it generally provides about $2,500 of additional coverage, says Loretta Worters, vice president of the Insurance Information Institute in New York City, an industry trade group and information clearinghouse.

This type of insurance may be appropriate for a one-person business without a lot of valuable equipment or many business-related visitors, and unlikely to suffer a major loss if unable to operate for a while as a result of fire or another disaster. Such coverage may work, for example, for an accountant who works at home preparing customers’ taxes and delivers the returns via email, Hanley says. But it could leave a home-based business owner on the hook for costs such as a large medical bill for that injured UPS man.

2. In-home business policy
An in-home policy covers a broader spectrum of contingencies, including loss of critical documents or theft of funds being taken to the bank for deposit. An in-home policy, issued by a home insurer or a specialty firm, usually is a plan against injury or theft covering as many as three employees, Worters says. Rates typically run from $250 to $500 and the plans can cover as much as $10,000 in losses.

Most serious home-based business owners may want to consider picking up at least an in-home policy, says Rebekah Marshall, multiproduct insurance manager at the National Federation of Independent Business. “This covers business equipment and liability [for injury],” she says. “That’s important if people are coming in and out.”

Related: When Every Office is the Home Office

If you’re interested in an in-home policy, you’ll need to find one that will cover your business type in your state. Each state sets its own rules about the insurance coverage that can be offered to home-based businesses. In general, given the low coverage amount, purchasers of in-home policies often operate low-revenue or part-time businesses.

3. Business owner’s policy
Entrepreneurs who need more than $10,000 of coverage should pay for a business owner’s policy. This comprehensive policy is what brick-and-mortar retailers, among other businesses, use, Marshall says.

Circumstances usually covered by this type of plan include damage to or loss of business equipment and other assets, liability for customer injuries, loss of critical records, malpractice or professional liability claims, and loss of income or a business interruption in the case of a power outage or a natural disaster. Such a policy might also protect you when driving a personal vehicle for business purposes.

This insurance protects against a higher amount of loss than a homeowner’s policy rider or an in-home business policy. Videographer Logan Hale, owner of 2-year-old Your Little Film in Los Angeles, paid about $500 for a $2 million business owner’s policy to cover his $25,000 of equipment against breakdown, theft or damage. His plan also covers loss or damage to home movies sent to him by customers, as well as injury or property damage inside a client’s home or public venues. He shopped around a bit before Los Angeles-based Farmers Insurance agent Rodney Pyle found a specialized policy for videographers, he says.

“As I started increasingly going into people’s homes to shoot, it really pushed me to say ‘2011 is about getting covered,’ ” he says. “Now I feel so much safer, knowing I’m not putting my family at risk for a possible lawsuit.”

Related: How To Create a Home Office on a Budget

As your company grows, it may require additional coverage not covered by a business owner’s policy, Marshall says, such as life insurance, workers’ compensation, and business-vehicle insurance. But for most small businesses, the business owner’s policy can provide a suitable basic safety net.

Business owner’s policy “is an investment in the business you should make if you’re serious about what you’re doing,” Marshall says.

Greygor is relieved that Sassy Mama is now covered by the business owner’s policy she purchased in April, especially the protections in case a customer is harmed by a product, she says. Like Hale’s, her policy has $2 million worth of coverage.

“I’m a mom,” she says, “and I wouldn’t ever want to be looking at another mom and saying I don’t have enough coverage for [her] injured child to be taken care of.”

Taking Out A Payday Loan? You Require These Guidelines!

Get fast $ 1000 GetFast Pay.com Baton Rouge Louisiana low apr Get $700 tonight fast wire transfer. You can also apply instant $ 200 GetFastPay Reviews Cincinnati Ohio no credit check .

Can be your income insufficient to meet this week’s demands? Do you want just a little help? A cash advance could possibly be the solution you may have been seeking. When considering a pay day loan, use the info discussed in this article.

To prevent extreme service fees, research prices prior to taking out a payday advance. There could be numerous organizations in your neighborhood that provide online payday loans, and a few of these businesses could offer far better rates as opposed to others. By checking out all around, you may be able to spend less when it is time to repay the money.

Frequently people find them selves in a place exactly where they already have hardly any other selection than to get a pay day loan. When you can steer clear of achieving this, attempt your best to do this. Try out asking a close family member or friend before you take out a payday loan.

There are express laws and regulations, and restrictions that particularly include payday cash loans. Frequently these organizations have realized approaches to function around them officially. If you sign up to a payday loan, tend not to believe that you are able to find out of it without having to pay it well entirely.

If you’re in danger around previous payday cash loans, some companies might be able to provide some support. They will provide you with suggestions free of charge, could help you have a cheaper interest rate or they can combine your loan, that can assist you get free from creating paycheck obligations all the time.

Make sure you have money at present inside your account for repaying your payday advance. The pay day financial institution will pursue payment aggressively in the event you don’t reimburse your payday advance as decided. Should you overdraft your bank account, your banking institution will ask you for fees on the top of the excess money you can expect to now are obligated to pay the pay day lender. Make sure that money is there to keep everything stable.

Read the small print just before any personal loans.

Seeing as there are usually extra fees and terminology hidden there. Many individuals make your error of not undertaking that, plus they wind up owing considerably more compared to they lent to start with. Always make sure that you realize totally, nearly anything that you are currently signing.

Online payday loans not simply bring big costs, if you do not have the resources to repay them, they can also lead to an overdraft fee through your lender. Some loan companies will ask you for yet another cost should they will not get yourself a monthly instalment on time.

Just before accepting personal loan money, know what the APR is. A lot of people create the oversight of considering other factors, but this is a vital as it tells you how high the costs you wind up paying will be.

The ideal tip accessible for using pay day loans is usually to never have to use them. When you are struggling with your debts and could not make comes to an end meet, pay day loans are certainly not the right way to get back to normal. Attempt making a spending budget and saving some money to help you stay away from most of these loans.

Seek out greater options than just comitting into a payday loan. You might be able to get some good dollars from a relative or the bank. Online payday loans need to basically be taken off in emergency scenarios once you have not any other choices.

Be on your guard against online payday loans that come your way via an affiliate internet marketing middleman. In many cases you will certainly be associated with a loan company from yet another status which might help make your bank loan unlawful. This will help you prevent agonizing economic outcomes in the future.

Is getting a cash advance some thing for you to do? Pay day loans can be quite useful when you really need funds quickly. Use everything you learned right here and you’ll be able to locate and obtain a payday advance so you can get whichever you’re needing. There exists not any reason you ought to have to be stressed out due to the fact you’re incapable of purchase anything.

Get The Most From Your Cash Advance Following These Pointers

Get quick $100 lion loans Anaheim California no employment verification Get $700 tonight fast wire transfer. You can also apply instant $100 lion loan Anaheim California no faxing .
It is actually a big tension should you not have the money that you desire. Luckily, you can get funds fast. One popular selection for fast income might be a payday advance. You can get your money you require right away. Read more to discover all you need to learn about pay day loans.
In almost any function, if you want to protect a payday loan, be sure to have only one out at any moment. Don’t check out several firm to have payday loans. You’ll find yourself the inability to pay back each of the dollars, no matter what your earnings could possibly be.
Before you apply for a payday advance, check the company’s BBB account. There are quite a lot of unreliable firms that try to rip-off you for various motives. Take a moment to safeguard yourself from the predatory businesses.
Believe meticulously about what amount of cash you require. It can be attractive to get a personal loan for much more than you require, although the more money you may well ask for, the better the interest rates will likely be. Not merely, that, but some companies may clear you for the certain amount. Go ahead and take cheapest volume you will need.
Repay the full bank loan as soon as you can. You are going to get yourself a because of time, and seriously consider that particular date. The earlier you have to pay back again the borrowed funds completely, the sooner your purchase using the cash advance company is comprehensive. That will save you funds over time.
If you would like obtain the most sensible pay day lender, seek out loans which can be presented directly by creditors, not through indirect sources. Indirect personal loans have greater charges than direct personal loans, and also the indirect loan provider could keep some with regard to their income.
Ensure that you browse the regulations and relation to your payday loan meticulously, in order to steer clear of any unsuspected shocks in the foreseeable future. You ought to be aware of the overall financial loan deal prior to signing it and acquire your loan. This can help you come up with a better choice with regards to which financial loan you need to accept.
Make a note of your settlement expected times. After you have the pay day loan, you should spend it rear, or at best come up with a transaction. Even when you forget about when a settlement particular date is, the company will make an attempt to withdrawal the total amount from the banking accounts. Listing the dates can help you bear in mind, allowing you to have no issues with your lender.
A payday advance may possibly cause more debts. You should consider just one single cash advance and not set a pattern. It is important to get free from this cycle no matter what. It is extremely easy to fall into this trap in the event you don’t take steps to stop it. A brief word loan designed to assist you of the combine can simply become a debts that is certainly extremely difficult to pay back.
Ensure you read each of the fine print before signing any cash advance papers. Go shopping for a payday advance company that offers the alternatives you want at the smallest expense. You must make a comparing on terms and conditions prior to you making a software so you do have a great encounter.
When it comes to payday cash loans, do a little looking about. You will see that there is a large number of fees and various costs all over lending organizations. You might find a spot that appears excellent, but there might be someone much better down the obstruct. Don’t indicator in the dotted collection right up until you’re certain you’ve identified the most effective lender for your needs.
For people who get stuck in a place exactly where they have several payday loan, you must look at alternatives to paying out them off. Consider using a advance loan away your charge card. The interest will likely be reduced, and also the charges are significantly less compared to payday cash loans.
If you have to make a payment immediately, a cash advance makes it achievable. You simply need to understand what they include, so there are actually no excitement. The guidelines in this article will help you to be equipped for the complete method. Therefore, you can obtain a bank loan that helps you, and shell out it back again without delay.

Knowing the Benefits of Teambuilding Workshops

A teambuilding workshop is generally a approach to present high-impact mastering, increase staff skills as well as communications, along with enhance well-being and also production. Staff profit through suffering from a feeling of success in operating as any party to accomplish the demanding process as well as studying methods in order to improve conversation skills. Crew building makes it possible for employees for you to return for you to the place of work reinvigorated along with with some sort of new fixed of challenge-resolving expertise.

Teambuilding is actually helpful intended for breaking obstacles in between men and women by means of team involvement in actions. Individuals who else are not necessarily accustomed to operating with each other get any opportunity to participate along with work together. By operating through some sort of job, typically the multiplicity associated with expertise inside the crew is outlined and also the particular group finds out new methods of functioning collectively. Teambuilding activities which highlight connection permit individuals to see, on their own, the significance of fine communication along with develop brand-new methods regarding accomplishing this particular job. To learn more, go to www.pawoskyting.com today.

Find Out Where Your Employees Are Any Time They’re Working

Many businesses have employees who work outside of the main building. Shipping drivers and also service technicians must consistently be outside of the business office to do their job. However, employers have to ensure the employees are working when they’re out of the workplace as well as will desire to ensure they are making the most of their time at work. To do this, quite a few companies are now using an employee tracking app that permits them to see where they are and also just how much work they’re undertaking any time they’re not in the business office for the day.

Tracking exactly where an employee goes in the course of work hours provides a great number of benefits for the employer and also the worker. The boss will be able to check into the staff member any time to ensure they are where they’re meant to be and in order to locate them if their own vehicle is not functioning and thus they’ll require help. They will be able to check to be able to make certain the employee’s route is right so that it enables them to get a lot more work accomplished during the day. And, the worker will know they are able to have aid if perhaps they are lost or if they have virtually any problems when they are working.

Another gain of having the ability to keep an eye on where the workers are through an app is actually to be able to keep an eye on the time they spend working. The employees can clock out for a lunch time easily without the need to get back to the workplace and the boss could make certain they really are doing as much work as possible throughout the day. It will help the employer realize just what to do to be able to help an employee be far more productive as well as helps make certain the worker is working whenever they may be out of the office. Additionally, employees might be sure they’re able to take their own lunch break or other breaks when it’s practical, rather than needing to return to the business office in order to clock in or perhaps out for their breaks.

There are in reality many benefits associated with using a tracking app together with the ones described here. If you are thinking about an app in order to help keep an eye on your staff members, check out an Employee time tracking app that includes everything you’ll have to have. Check out the web page in order to find out far more about precisely how it works as well as the added benefits it may offer your business and also your staff members.

Additional Training Could Help Enhance Your Occupation Easily

Professionals may desire to make certain they understand as much as is possible about their own field. No matter just what their own occupation is, learning much more regarding the trade will likely be amazingly helpful. If they’re in the manufacturing field, acquiring scientific molding training may help increase their particular understanding of the field, assist them to do their job far better, and also can assist them to go even farther in their career more rapidly because they will have the know-how they have to have to receive the position they’ll need.

Anytime someone desires to receive further training for their field, registering for seminars will be advisable. Somebody can enroll in one of the area scientific molding seminars and devote a day understanding more about the field. They may discover more about precisely how the machines work, just how to do the many jobs inside the molding process, and just how everything all comes together to be able to generate the final product. A better comprehension of the process may help increase their expertise in the field and also their own occupation even if perhaps they aren’t directly associated with the process and also can help them be better at fixing troubles in the future.

Along with seminars, they might be thinking about scientific molding classes. These types of classes go over more material compared to the seminars, yet they’ll furthermore require more time to be able to complete. A lot of classes these days may be accomplished in their spare time online so they do not need to take days off work. At the end of the class, they might receive a certification that shows they’ve finished the class as well as that they grasp the material that was presented during the class. This will help when they may be thinking about a promotion as they may be a lot more qualified compared to various other candidates because of the additional education they’ve acquired.

In case you want to enhance your profession, attaining further familiarity with the trade you work in could be priceless. It never hurts to actually learn more and to take classes or perhaps go to seminars that will boost your knowledge. If perhaps you’d like to get going now, be sure you will look at the injection molding training that is offered now. Go on and get going getting the skills and expertise you will need to have to improve your occupation today.

How to Make Sure Your Small Business Preserves the Best Online Reputation Possible

Just about every organization out there needs shoppers, and of course as a way to have shoppers, it should be situated in a manner as to become located by them. This will be as true involving current customers as it is with completely new leads, and it’s as genuine inside a traditional sense (supposing that it is that kind of business) as it really is within a Internet sense. Almost all of today’s firms have property within the online world although they just don’t actually have a local store to which their clients visit them. Study nowadays tells us that well before any consumer at any time hikes across a firm’s threshold, it generally first found their web page through an Internet search engine.

Because of this one of the most essential issues of all businesses is usually preserving its good popularity as effectively as a extremely noticeable position online. In the event the company’s current or maybe prospective prospects type its brand in their favored search engine, (as well as key phrases associated with the goods and the solutions the business supplies) it is crucial that the corporation actually rank as close up to the top with the returned sites as is possible. Whilst a very good website design company is able to do very much to produce a web-site visible because of particular keywords and phrases, it will take a lot of time for one to be able to sustain and also watch a firm’s position via social websites. This specific task is just too important to ever leave undone, plus costly with regard to manpower time spent.

The remedy is usually the actual recruitment of a review management platform. A local seo management platform like Chatmeter largely will automate the procedure of monitoring just what individuals are talking about concerning one’s company online. If perhaps there’s concern that a buyer might submit a poor assessment, and after that that critique harmfully influence the opinion of others, a reputation management platform is just what is wished for to gain an early on alert about the circumstance. In this way, any social media plan that is put in place there on account associated with someone’s business is going to be useful plus prosperous. You can also make positive that almost any established information that is submitted on the web is accurate and you’ll be able to respond to responses appropriately shortly after they are made.

Some Insurance Gambles That Put Your Business at Risk

Much like sunscreen, business insurance is one of those things you don’t realize how important it is until you’ve been burned: A lot of entrepreneurs don’t have it, and those who do, may not be fully covered.

While large corporations have staffers specifically trained to be sure the business is protected adequately, small business owners are often not aware of the risks their business faces.

 “Smaller businesses tend not to get the right amount of coverage,” says Loretta Worters, vice president of the Insurance Information Institute, an industry trade group that aims to educate the public about insurance. “They will get too little or not the right coverage.”

Here, three of the most common mistakes to avoid when deciding on business insurance.

1. You view insurance as one-size-fits-all. Think again. There are four basic types of insurance that all businesses need, according to Worters. Property insurance protects the building that your business is housed in and the inventory, raw materials and computers that you own. Liability insurance protects you against lawsuits. Business vehicle insurance covers any autos owned by the business. Finally, in every state except Texas, a business with employees must have workers compensation insurance should an employee be injured on the job.

In addition, every industry has its own specific risks and your business may require a specialized policy. “You need to get an agent that understands your line of business,” says Worters, noting that you should talk to an agent before just signing up with one. Ask a local business group or association for a recommendation.

2. You think you’re covered by another policy. “The biggest mistake [business owners] make is they assume they don’t need coverage,” says Ted Devine, CEO of Dallas-based Insureon, an online small-business insurance agency. He says business owners often falsely believe their company is covered by their client’s policy or they’re no longer at risk when a client leaves. Not true, according to Devine. A client can come back and sue you years after an event or transaction occurs, he warns.

And don’t think your homeowner’s policy will bail you out, either. Even if you have a home-based business, a homeowner’s policy won’t protect it should you get into any legal issues with employees or business litigation. Whether the homeowners’ policy will protect your business property in your home depends on the policy, says Devine.

3. You think you’re invincible. Worters says many businesses don’t even consider what is called either business income or business interruption insurance. If a natural disaster hits, for example, and your business closes, your revenue can be immediately shut off for an undetermined amount of time, and that can really threaten the life of your business.

Know More About Raise prices to increase profits

I know at first glance this sounds obvious, but it may be worth it for you to think about your prices. At least just for a moment.

How did you decide on your current pricing? Did you conduct market research to understand what prospects would pay? Or did you compare yourself to your competitors and base your price on that? Or was it a crapshoot, and random shot in the dark?

 

These are the ways most people do it, and they are all wrong. Because the price you set for your products and services is more important than you think.

The following few paragraphs are a bit number heavy, but stay with me because this will be really valuable for you to understand.

More Pricing Help
Find more articles on how much to charge for your products and services in our special section on pricing.

Let’s say you sell a high margin product – information products and software are two good examples. Your price is $60, and your costs are $10 – that means your gross margin (selling price – your costs) is $50 each time you sell one unit. Let’s say further that your overhead is $5,000 per month. If you sell 100 units you’ll break even, right?

Now you want to sell more, and decide you can take some business from a competitor by lowering your price – temporarily. You lower it to $40 – a 33% price cut, and not uncommon.

Your costs remain $10 and your overhead is still $5,000, only now your gross margin is $30 – 60% of what it was before. And how many units do you need to break even now? 166! That’s 66% more unit sales required to make up for the 33% price cut!

But what if you’re feeling very aggressive and you cut your price in half (also not unheard of) to $30. Now you have to sell 250 units – just to break even! That’s 2-1/2 times as many as before. How easy do you think that’s going to be?

Let’s use a different example – something that has real manufacturing costs. This time, your product sells for $100, and your cost of goods are $50 per unit, for a gross profit of $50. Same $5000 overhead, same number of units to break even. Now imagine you cut your price 20%, to $80, leaving you with $30 of gross margin. You need to sell 66% more units. Ouch!

What if you cut the price to $70. This 30% price cut means you have to sell 2-1/2 times more units – just to stay even.

Let’s go further…

Competition is really heating up and you think that matching them cut for cut is the way to go. The price for this amazing widget of yours is now a bargain basement $60.

(Shucks, that’s only 40% off your original price. Salespeople and business owners do this every day.)

How many units do you need to break even? 500.

Five hundred? That’s five times your original number.

Do you really think you can sell five times what you did before – at least without significantly raising your overhead and your variable cost of sale?

How many times have you done just this in response to competitive pressures?

How many times have you cut prices because you thought it would help you sell more?

What we’ve just done is a simplified version of what’s called margin analysis, and I hope it gives you a glimmer of what can happen when you mis-price.

For the most part, your price cuts don’t automatically enable you to sell 66% more than you did before, and generally – at least not in this universe – you don’t sell 250% more, and never, ever do you sell 500% more with this kind of price cutting.

But there is some good news – and it’s very good.

Let’s look at what happens when you raise your prices.

Remember your high-margin product. It sells for $60 and costs $10 to make.

Through good product positioning and excellent marketing you raise the price to $70. That’s only a 15% increase. Now you only have to sell 83 units to break even, and if you sell the same 100 units, your profits go from $0 to $1000. Nice increase…

And that “hard” product – the one with $50 of costs? Raise the price tag 20% to $120, your margins increase to $70, and now your breakeven drops 71, and you make $2000 if you sell the same number of them.

See how this works?

You can do this same analysis in a bit more sophisticated way, considering your marketing costs, sales or affiliate commissions, travel expenses if you have them, and so on. You can see the actual pricing effect varies quite a bit depending on these details.

If you have a high-leverage, pay-only-for-results affiliate model, a very high gross margin and almost no fixed overhead, you have a lot of price flexibility. You can cut the price 25% and only need to sell 15% more! That’s not too bad at all.

But only in that type of model. If you have a office, some staff, and a physical product – in other words, fixed overhead – lower prices can kill you – and you won’t even see it coming.

And higher prices?

They can make you rich.

By now you are starting to see the tragic effects of mis-pricing on the downside, and the marvelously enriching possibilities of raising your prices

Some Tests to Qualify for a Small Business Loan

Want to get a small business loan? Banks and other lenders are really only concerned about one thing; getting repaid. After all, that is how they still make the bulk of their revenue; making loans and getting repaid both interest and principal. Thus, to qualify for a business loan, you simply have to demonstrate that your business can service the loan request – meaning being able to make the loan payments for the life of the loan.

Most lenders will perform the following three analysis calculations to determine if your business has the cash flow to service the proposed new loan.

1) Spread The Financials:

Banks / lenders will require three years of past financial statements at a minimum.  The reason is to see if your business could have serviced the loan over the last three years.  If it passes this test, then your business should be able to service the loan for the next three years.

Thus, they use your past business performance to determine what your future performance should be.

To spread your financial, most lenders will do the following for each past period that your business provided financial statements:

  • Take your net income (that is your net profits after all operating costs, taxes and interest payments).
  • Add back any non-cash accounting items like depreciation (deprecation is not an ongoing cash expenses but an accounting anomaly to reduce taxable income for tax reporting purposes only).
  • Add back any one-time charges or expenses – expenses that are not expected to reoccur in the future.
  • Then subtract out the interest charges for the proposed loan – only the interest portion at this stage as interest payments are considered regular business expenses.
This results in the true net positive (hopefully positive) cash flow of the business – cash flow that will be used to pay the principal portion of the business loan.

Now, if your business’s cash flow at this point can cover the principal portion of the loan, you have almost passed this test.

Most lenders will not just want to see if your business’s cash flow meets the minimum principal portion of the proposed loan but would like it to cover 25% or even 50% more.  The reason is that should your business have a slow period and revenues decline by say 25% or 50%, your business’s cash flow would still be sufficient to make the loan payment.

Example:  Your business requests a $100,000 loan for three years with a monthly payment of $3,227 – broken down as interest of $449 and principal of $2,778. Therefore, your monthly cash flow should not only cover the $2,778 in principal but say 1.25 times more or $3,473.

Also, keep in mind that this cash flow figure should not only cover the proposed loan’s principal but the principal payments of all the business loans the company has.

Principal payments are not income statement items and are not accounted for based on normal operating income and expenses but are balance sheet items and are paid out of net income (after all operating expenses). Interest charges from loans are an operating expense and accounted for when the financials are spread. Financials could be spread monthly, quarterly or even annually – depending on the types of financial statements requested or the policies of the lending institution.

If you can pass this test via your past business performance, then it is highly expected that your business will do the same in the near future.

2) What If Scenarios:

Here, the lender will perform a series of “what if” scenarios on your financial statements.

For example, they may take your total revenue per period and reduce it by 10% or 20% – keeping all other items (your expenses) the same. Then, spread those numbers again to see if your business could still service the proposed loan, i.e., still have the cash flow to make the payments. Again, reassuring the bank or lender that your business would still be able to repay them should your business hit a slow period.

3) Debt-to-Equity Ratio:

Lastly, while your business may be able to service the proposed loan’s payments, banks also want to ensure that your business is not over leveraged – meaning that your business does not have too much debt in comparison to its equity.

Let’s say that the entire market declines or crashes and your revenues fall so low that you are forced to shut down the business.  In this situation, would you still be able to repay all your lenders – including this proposed loan? Thus, lenders look to a safety measure known as the debt-to-equity ratio.

Measuring your debt-to-equity is simply taking your Total Liabilities and dividing them by your company’s total equity. The higher this ratio, the more risk the business has as it is relying on too much outside debt financing. A ratio over 3 (meaning that the business has three times the debt as it does equity) is too much risk for most lenders to feel comfortable with. Most businesses will have a debt-to-equity ratio between 1.5 to 2 and are considered safe to their prospective lender.

Now, if your business does not pass all these tests with flying colors and you still need a small business loan to grow, then it is up to you (the business owner) to manage your company in such a way to bring your business in line with these tests.

It all starts with your understanding of your business and the measures it has to pass to qualify.

All About Insurance Tips

  • Premiums for fire, casualty and burglary insurance on business property are all deductible for tax purposes as trade or business expenses. If a business taxpayer has a self-insurance plan, however, all payments into the self-insurance reserve will not be tax-deductible for purposes; the actual losses incurred by the taxpayer would be the deductions.
  • Premiums for life-insurance are tax-deductible. But premiums paid on a policy covering the life of an officer, employee or other key person are not deductible if the business is a direct or indirect beneficiary under the policy. Premiums paid on a life insurance policy of which the business is a beneficiary are not deductible, since life-insurance proceeds would not have to be included in taxable income when received by the company.

  • Before speaking with an insurance representative, write down a clear statement of your expectations.
  • Do not withhold any important information from your insurance representative about your business and its exposure to loss. Treat the individual as a professional helper.
  • Get at least three competitive bids using brokers, direct agents and independent agents. Note the interest that the representative takes in loss prevention and suggestions for specialty coverage.
  • Avoid duplication and overlap in policies; you will be paying for insurance you do not need.
  • Ask your insurance firm if it’s an “admitted insurance company.” If so, it should have a solvency fund should a catastrophe put the insurance company in danger of going under. An unadmitted carrier has no such solvency fund.
  • The small businessperson should not consider any form of self-insurance. The pool of funds necessary to safely insure losses is extraordinarily large.
  • Get your insurance coverage reassessed on an annual basis. As your firm grows, so do your needs and potential liabilities. Underinsurance ranks as a major problem with expanding firms. Get an independent appraiser to value your property; if it has been more than five years since it was last appraised, chance are you’re in for a surprise.
  • Keep complete records of your insurance policies, premiums paid, itemized losses and loss recoveries. This information will help you get better coverage at lower costs in the future.

Insurance Losses

  • Virtually all policies require notification of an accident within 24, 48 or 72 hours of the incident. The claim itself does not necessarily have to filed at this time. Failure to report the loss may nullify your right to recovery.
  • There must be come proof of loss, though you will have a reasonable period to provide documentation if needed.
  • The insurer usually has three options when it comes to fulfilling the terms of a replacement policy: paying cash, repairing the insured item, or replacing the insured item with one of similar quality. Don’t hesitate to let the insurer know if you prefer one of these reimbursement methods.
  • Disputes regarding the amount of the settlement are put to arbitration. Thus an independent appraiser acts as judge in the conflict Don’t hesitate to use this system of resolving differences. If a compromise cannot be found, a lawsuit can be initiated.