Guide to Small Business Insurance Coverage

The subjects discussed in this risk management guide should heighten your awareness of business insurance and encourage you to consider carefully the various insurance programs and options available on the market.

It is imperative that all small business owners and managers understand the various aspects of insurance and how it can help a firm be more successful.

Your Independent Agent is your key to protecting your business and ultimately, contributing to your success. Multiline agencies can provide a comprehensive range of employee benefits, property/casualty and financial services to small businesses.

In addition to helping you identify, minimize and in some instances eliminate business risks, this risk management guide includes a Checklist to help you strengthen your insurance program and provide guidelines for discussions you should have with a qualified insurance professional. A Glossary of Insurance Terms is also included to provide simple definitions for the highly technical terms you will encounter when selecting insurance for your business. Gemstone business plan sample; gemstone business plan PDF.

RISK MANAGEMENT AND THE SMALL BUSINESS

Is your business a risky business? You bet! Every small business is. Just think for a minute about the hundreds of things that most business owners worry about. A few are predictable or, at the very least, are items that you can plan for and perhaps even control to a certain extent, such as:

expected sales volume

salary costs

taxes

overhead expenses

equipment and supply costs

the price you charge for the goods or services you offer to your customers

Others are unpredictable, largely beyond your control. Examples of these unpredictable risks include:

actions your competitors may take

changing tastes and trends

the effect they have on your market and your customers

the local economy and its impact on your customer base (plant closings or unemployment, for example).

And then there are the events that can and do happen to small businesses all the time. They could directly affect your day-to-day operations, impact profits, and result in unexpected financial losses that may be serious enough to cripple your business or even bankrupt it. You've probably already considered the most obvious risks and have bought insurance to protect against the financial losses that could result from them. Most business owners recognize the loss potential from fire and injury.

Fire could damage or destroy the building your firm occupies and turn the building's contents into a pile of smoking rubbish. Whether you rent or own, your place of business and your ability to continue to do business may both be seriously affected.

If someone is injured on business premises, or injured by a product you manufacture or market, or because of the way your firm performed a service, your firm may be held responsible for that person's medical bills, lost wages or even loss of future income.

Loss of property from fire and liability for injury to another person (or another person's property) are familiar exposures. But there are hundreds of other losses and liabilities that every small business faces, many of which are often overlooked or ignored.

Large corporations often employ a full-time "risk manager" to identify and analyze possible exposures to loss or liability. The risk manager then takes steps to protect the firm against accidental and preventable loss and to minimize the financial consequences of losses that cannot be prevented or avoided. But most small businesses can't afford the services of a risk manager, even part-time, so the business owner often has to take on that responsibility.

WHAT IS "RISK MANAGEMENT"?

Regardless of who does it, risk management consists of:

1. Identifying and analyzing the things that may cause loss.

2. Choosing the best way of dealing with each of these potentials for loss.

You've worked hard to build your business, and you've poured a lot of time, effort and money into identifying loss exposures.

Identifying and Analyzing Exposures to Loss

Identifying exposures is a vital first step: until you know the scope of all possible losses, you won't be able to develop a realistic, cost-effective strategy for dealing with them. The last thing you want to do is come up with a superficial BandAid approach that may cause more problems than it solves.

It is not easy to recognize the hundreds of hazards, or perils that can lead to an unexpected loss. Unless you've experienced a fire, for example, you may not realize how extensive fire loss can be. Damage to the building and its contents are obvious exposures, but you should also consider:

the damage or destruction that smoke or water from dozens of fire hoses can create.

damage to employees' property (coats, tools and personal belongings) and to property belonging to others (data-processing equipment you lease or customers' property left with you for inspection or repair, for example).

the amount of business you'll lose during the weeks (or months) it takes to get back to normal again.

the loss to competitors of customers who may not return when you reopen for business.

You begin the process of identifying exposures by taking a close look at each of your business operations and asking yourself:

1. "What could cause a loss"? If there are dozens of exposures you may find dozens of answers.

For each exposure you identify, ask yourself:

2. "How serious is that loss"? (This question helps you focus on the possible severity of each exposure. What kind of price tag, in dollars and cents, applies to that exposure?) The purpose here is not to determine where the money will come from, but how costly the loss could be.

Many business owners use a "risk analysis" questionnaire or survey as a checklist. These are available from insurance agents, most of whom will provide the expertise to help you with your analysis. With their expertise and experience, you're less likely to overlook any exposures. They'll also be available to answer your questions when you try to determine how serious a loss from a given exposure may be.

WHAT KINDS OF EXPOSURES SHOULD I LOOK FOR?

In general, most questionnaires and surveys address the potential for:

property losses

business interruption losses

liability losses

key person losses

automobile losses

Property Losses

Property losses stem from one of the following:

physical damage to property

loss of use of property

criminal activity

Since the owner of Your own company you deal with issues on a nearly daily basis. Being comfortable with effective Problem Solving
Techniques can radically affect the growth of your business.

Although you Find answers to your problems, many businessmen and women aren't really skilled in the ways of problem solving, and
if solutions fail, they fault themselves for misjudgment. The issue is usually not misjudgment but rather a lack of ability.

This guide Instructs you in some problem solving processes. Crucial to the success of a company faced with issues is your
comprehension of what the issues are, setting themfinding solutions, and selecting the best answers for your situations.

What is a problem. A dilemma is a situation that presents difficulty or perplexity. Issues are available in many shapes and sizes.
By Way of Example, it can be:

Something did Not work as it should and you also don't know why or how. Something you need is unavailable, and something has to be
found to take its place. Employees are undermining a brand new program. The market is not buying. What should you do to survive?
Clients are complaining. How do you manage their complaints?

Where do Issues come from? Problems arise from every aspect of human and mechanical purposes in addition to from nature. Some
problems we cause ourselves (e.g., a hasty decision has been made and the wrong individual was chosen for the job); other problems
are brought on by forces beyond our control (e.g., a warehouse is struck by lightning and burns down).

Problems are a Natural, regular occurrence of lifestyle, and in order to suffer less from the anxieties and frustrations they
cause, we need to find out to manage them in a reasonable, logical fashion.

If we accept The simple fact that issues will appear on a regular basis, for a variety of motives, and by a variety of sources, we
can: learn how to approach problems from an objective point of view; learn how to anticipate some of these; and prevent a number
of them from becoming bigger issues.

To accomplish This, you have to learn the process of problem solving. Here, we'll instruct you in the fundamental procedures of
difficulty. It is a step-by-step guide which you can easily follow and practice. As you follow this manual, you will eventually
develop some strategies of your own that work in concert with all the problem-solving procedure described in this guide.

Remember, However, as you read that this isn't a thorough analysis of the art of problem-solving but instead a sensible,
systematic, and simplified, yet effective, method to approach problems considering the limited time and information most business
owners and managers have. Additionally, some issues are so complex that they require the additional aid of specialists in the
area, so be ready to accept that a number of problems are beyond one person's ability, ability, and desire to succeed.

To be able to Appropriately identify the problem and its causes, you have to do some research. To do this, just list all the
preceding queries in checklist form, and maintaining the checklist useful, go about collecting as much information as you possibly
can. Remember the relative importance and urgency of the issue, as well as your time limitations. Then interview the people
involved with the issue, asking them the questions on your checklist.

When You've Gathered the data and reviewed it, you will have a pretty clear understanding of the issue and what the major causes
of the problem are. At this point, you can research the causes further through observation and extra interviewing. Now, you should
summarize the problem as briefly as possible, list all the causes you have identified, and record all the areas the problem seems
to be affecting.

Now, You're ready to check your comprehension of the problem. You've already identified the issue, broken it all down to all its
facets, narrowed down it, done research on it, and you are avoiding typical roadblocks. On a large mat, write down the issue,
including each of the variables, the regions it affects, and what the consequences are. For a better visual comprehension, you
might also wish to diagram the problem showing cause and effect.

Study what you Have written down and/or diagrammed. Call on your employees and discuss your investigation together. Based on their
feedback, you may decide to revise. Once you think you completely understand the causes and effects of the problem, outline the
problem as succinctly as easily as you can.

Proceed through your Long list of solutions and cross-out those who obviously won't work. Those notions are not wasted for they
impact on those thoughts that remain. In other words, the very best ideas you pick may be revised based on the thoughts that
wouldn't work. With the rest of the solutions, use what is called the"Force Field Analysis Technique." This is basically an
analysis technique that divides the solution down to its positive effects and negative effects. To do so write each solution
you're considering on a different piece of paper. Below the solution, draw a line vertically down the middle of the paper. Label
one column benefits and one column downsides.

Now, some more Analytical thinking comes in to play. Assessing each facet of the solution and its influence on the problem,
listing each of the benefits and disadvantages you may consider.

One way to help You think of the advantages and disadvantages would be to role-play every solution. Call in a couple of your
workers and play out each solution. Ask them to their own reactions. Depending on what you see and on their opinions, you'll get a
clearer idea of the benefits and drawbacks of each alternative you're considering.

Once you Complete this procedure for each solution, pick those solutions that have the Most advantages. At this point, you ought
to be considering only two or three.

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