Small businesses aim to grow, and the way they do that is to re-invest much of their profit into themselves in the hope that additional marketing or improved services will lead to greater levels of custom – and profit.
But that can mean that every extra pound is ring-fenced for reinvestment when perhaps some should be put into protecting the business that already exists, rather than the profit that might one day be produced by a new and improved business.
Protecting your existing business comes in one of two forms. Firstly, you could protect your business by familiarising yourself with all your legal duties towards your customers and staff and making sure that your premises and goods are as safe as they can be. You can also make sure that your premises are secure and alarmed against risks such as fire and theft. And you can make sure that you and your staff are all adequately trained in your relevant area of expertise to minimise the chances of something going wrong with the work or services you provide.
Secondly, though, you can protect it by taking out adequate insurance to protect your business assets against claims that can be made if something goes wrong despite all the measures you have put in place to prevent such an occurrence.
It’s easy to get a bit carried away when you consider what type of insurance you should get for your business – especially if you were to ask an insurance salesperson what they think you need! There is such a thing as being too risk-averse, and you have to keep in mind your profit margin as well as the likelihood of a particular risk occurring within your business.
So for example, if you don’t have customers visiting your premises and don’t visit customers elsewhere (if you work online or by telephone) then you won’t need Public Liability Insurance. Likewise, if you don’t have employees then you won’t need Employers’ Liability Insurance (though check carefully about the status of anyone who works for you, even if they seem to do so on a casual or self-employed basis as they could be considered to be employees).
If you only have close family working for you, you won’t need Employers’ Liability Insurance. Otherwise, you should assume that anyone who does any work for you could be classed as an ‘employee’ and get Employers’ Liability Cover accordingly. The reason for this is that this type of insurance is compulsory and if you don’t have it when you should, the Health and Safety Executive can issue a hefty fine and you could even face criminal charges. If you have to have Employers’ Liability Insurance it should be for a minimum of £5million and you need to display your certificate in each of the premises you own.
You must also insure your vehicle, and if you use it for business purposes you must inform your insurer or you might not be covered.
You can also choose to take out Public Liability Insurance (a good idea if you are in contact with the public) and Product Liability Insurance (which would cover claims made about faulty or dangerous products you manufacture, repair or sell).
Finally, just as you insure you home and contents, you should also insure your business premises and contents against fire, theft and flood.
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