There are several factors that you should take into account when determining what varieties of insurance coverage you want: how large or small your small business is, how it's organized (partnership, sole proprietorship, corporation, LLC), the number of employees, how you get paid (commissions, salary, fees), whether your small business is service or product oriented, your exposure to liability and location.
Things to ponder:
Do you have enough life insurance to protect your family, should you die prematurely? Why is this so important? Well, if you have a small service oriented business, it will be worth $0 when you die. For example, the spouse of a deceased doctor or lawyer can only sell the tools of the trade, not the clients (the true bread and butter of any small service business). Get a crystal ball and see into the future to know when you are going to die then you could sell your small business before you kick the bucket. Simple and straightforward, every single small service business owner should have at least 7X their gross income to adequately provide for their family.
Do you have a small business that your are setting up to have a family member run after you pass away? Well, be sure that they are capable, willing and licensed to do so.
What happens if you're not capable of running your small business because of an injury or a dehabiltating illness? Are you covered with enough disability insurance? For a stipulated period of time, you will be paid approximately 60% of your income when you have disability insurance. Depending on whether you claimed the premium as a business expense or not, your benefits might be non-taxable.
More important...do you have "business overhead insurance"? Who will cover the costs of running your small business (utilities, insurance, salaries) while you're out of commission? Your small business overhead expenses will not be covered by your disability insurance unless you include it as an add-on.
Do you have business partners? If so, do you have a "Buy and Sell Agreement"? Should your partner die, you will be protecting your interest in the business. Example: your partner dies... his wife claims her share of the business. What if your partner's relatives have no idea how to operate the business? Would they be asset or a liability? Wouldn't you simply rather buy out your partner's share of the company? Well, with this additional insurance, you wouldn't have to worry about your partner's family interfering with your small business.
Do you have "disability buy-out coverage"? What would you do if a partner becomes severely disabled? How would you feel if you had to keep on paying your partner for years to come when they cannot do any work because of their disability? Well, when you have "disability buy-out coverage", you would never have to wory about this situation because after a period of time, your disabled partner would be forced to sell his share of the business to you.
Of course, many of these situations may not occur, but it's your small business. The final step is to determine what varieties of insurance coverage you believe you want to protect your small business and then call and speak to a professtional who can set you up.
Opinions differ as to what the top seven stupid mistakes are made by small business owners. But one must remember that a business, no matter how large or small, lives or dies by its ability to stay profitable. When a small business owner makes an unwise choice it is because he or she is not thinking in terms of profitability and calculated risk. They are taking risks but leaving the calculated part out. Basically this means that the risks the small business owners are making are not well thought out and can have disastrous results on a small business. Here are some common stupid mistakes made by small business owners that reflect unwise decisions at the moment:
1. Doing business with the wrong people. New small business owners are so excited about getting their enterprise started and tend to not want to turn any work away whatsoever. This is a big mistake. All it takes is one customer who picks at everything yet doesn't want to spend a dime to destroy you. When you have a customer that does this, drop this person. Let him or her go to your competitors. It is not worth your time or effort. They will suck the very life from you and your business. They will scream, complain, and threaten but remember, they don't want to spend a dime on anything so they won't hire a lawyer to sue you either.
2. Chasing bad money with good money. What this means is over-investing in some idea or project that is risky. Never put all your efforts and resources into the same project. It is insane. If that project fails, you've lost everything.
3. Not taking the proper security measures. This is where you release products or services without reasonable assurances of payment from your customer. An example of this would be releasing a fully-licensed version of software to your clients without any payment. You are just opening up yourself to having that software stolen and never paid for. Make sure you release software as demo versions until paid for.
4. Not paying your taxes. In the United States, you could go to jail if you do not pay your self-employment taxes and Social Security taxes for your employees if you have any.
5. Letting a customer run your business. Remember that you should never put all of your eggs and resources into one project or customer. But quite often you will get one person who thinks he or she can tell you how you ought to run things and usually these are the ones who have not paid you a dime and will probably be late paying if ever. Take charge of your business and schedule things out. Never let a customer demand you put them first. By the same token, strive to treat everyone with courtesy and respect even if they are difficult.
6. Not having enough money to run the business. Your operational expenses need to be prioritized in your budget. That means creditors have to take a back seat. If you don't have the money to keep running your business it will die. There are monthly operational expenses you have to budget and plan for such as telephones, office supplies, service fees, utilities, and other cost centers. Identify them and plan for them. 7. Being dishonest. Don't tell people you can do things that you know good and well you can't. It will catch up to you in the end and destroy the reputation of your business.
These are just seven mistakes but the list could go on. One mistake not mentioned in the seven but it is the first one small business owners make all the time is failing to have fun. When your small business is no longer fun then you need to see what is wrong. Sometimes it means just taking a day off.
Both Edward Brancheau & Terence Young are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Edward Brancheau has sinced written about articles on various topics from Business and Finance, Insurance and Insurance for Business. Ed Brancheau created The Bank of Green to advise small businesses about subjects like and to help individuals build wealth through. Edward Brancheau's top article generates over 9900 views. to your Favourites.
Terence Young has sinced written about articles on various topics from Health, Personal Desktop and Skin Care. For more information on work at home opportunities visit: . Terence Young's top article generates over 246000 views. to your Favourites.