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Develop a plan to protect your business

Columnist Dean Swanson says finding the right — and the right amount of — insurance is a vital task.

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You have a lot of time and financial investment in your business so you owe it to yourself and your business to develop a business continuity plan that provides you with a roadmap to keep your business up and running while working through a crisis.

As you develop your plan, consider including these parts:

  • Identify your business’s scope. What things would prevent your business from operating as usual? What steps can you take to address them? Identify the most critical business functions and teach other employees or a partner how to do them.
  • Prioritize business needs. Document your needs based on the results of the business’s scope, then identify gaps in strategy to meet those needs. Always make sure at least one person knows where your business insurance information is located.
  • Create your plan. Organize a recovery team for a worst-case scenario; write business continuity and IT disaster plans, and document manual workarounds in case you need them. Back up this information to both a physical and digital location so you can continue basic business functions.
  • Hone, preach, practice. Review and practice your business contingency plan with your staff regularly. This will give you the opportunity to review any potential holes in your plan, as well as give everyone a chance to rehearse what to do in case the plan is put into action.
  • Maintain and update. Review your plan every six to 12 months to ensure it’s still up to date. Be sure any growth or change in your business experiences is reflected in your plan.

Business contingency planning doesn’t just provide peace of mind. It also forces you to identify and assess potential risks. This can further assist your risk prevention efforts, as well as help you determine what insurance coverage you need to protect your business.
Insurance is a key part of running your business. From protecting your delivery vans to your business personal property, getting the right coverage for your small business can protect you in case of a loss.

Even if you’re simply running a home- based business, your homeowners policy probably doesn’t provide coverage if a client gets injured while visiting your home office. Further, if you break a law you don’t know about, like an OSHA regulation or an intellectual property law, your business could be vulnerable. Business insurance, by contrast, can help provide the protection you need.

Which kinds of insurance does my business need? The answer can be complicated. An in-depth conversation with your agent, either over the phone or in person, can help you answer this question in greater detail.

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General liability insurance, often known as business insurance, is a fundamental policy that can cover third-party injury and property damage, personal and advertising injury and legal costs. Another option is a business owners policy, which typically provides general liability protection with the added benefit of protecting your property. A business owners policy generally helps if you operate a small- to medium-sized business that requires both liability and property protection. Larger businesses typically aren’t eligible for a business owners policy because they need more extensive property coverage than what these types of policies offer.

Professional liability insurance protects against claims of professional negligence, such as giving incorrect advice or failing to deliver a service. It’s typically needed by client-focused businesses in the event a client is unhappy with the work of your business and pursues litigation.

You'll need commercial auto insurance if you use your vehicle for business purposes. This includes transporting clients or running routine business-related errands.

One of the big ones is workers’ compensation, which covers injuries, medical bills and missing wages for your employees if an incident occurs while they’re on the job. Most states require certain small businesses to have this kind of insurance, and it’ll cover employees regardless of their negligence during working hours.

Cyber insurance covers damages in the event of a data breach, like data recovery software and business interruption costs. Cyber insurance can include coverage for third-party damages in the event there’s a breach or cyber incident involving a client or customer. Additionally, it can cover the cost of legal fees and settlement costs after a data breach.

Finally, commercial property insurance covers you if operate your business from a physical location outside of your own home. It protects your building and business personal property from things like fire, weather damage and vandalism. Coverage for your property can be purchased on its own or as part of a business owners policy.

Dean Swanson is a volunteer Certified SCORE Mentor and former SCORE chapter chairman, district director and regional vice president for the North West Region.

Related Topics: SMALL BUSINESSASK SCORE
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