The trick is to move from survival mode to prosper mode. It is important to avoid any of the seven sinkholes which can cause a business to fail while charting this course. Patricia Schaefer lists these in her book, “The Seven Pitfalls of Business Failure and how to Avoid them,” as follows: 1. Start a business for the wrong reasons. Poor Management, 3. Insufficient Capital Location, Location, Location, 5. Inadequate Planning, 6. Overexpansion, 7. No website.
What now? Did you know that your professional insurance can help you to survive the seven deadly sins in commerce? Insurance programs provide information and resources that will help you survive. To grow, companies must have access to all of their suppliers’ free and valuable resources.
Your insurance professional should temper your optimism about success. Instead, they should show what other businesses have gone wrong, i.e. They should show what similar businesses have done wrong. Although this might seem like a huge buzz kill, it is essential in identifying the second- and fifth reasons businesses fail: poor planning and management. It is also a great way to identify the second and fifth reasons businesses fail.
It is like looking through a magnifying mirror at industry secrets to see the whys and hows of competitor failures. An insurance professional will provide you with a risk assessment. This will include information about the types of claims that have been filed by businesses from similar peer groups.
They should also identify any local or state laws that require certain business operations to have specific insurance coverage. Employment Practice Liability, for example, is an area that has recently become a significant headache for many businesses. The coverage protects the enterprise against harassment, discrimination, and limited wage and hour violations that may result from payroll processing.
What is more difficult and time-consuming than managing a “difficult” employee-related matter in the daily operations of a business? Numerous insurance companies that are partners with your agent will provide free legal counsel to help you get quick answers or make sure that your policy or procedure comply with state law. You don’t need to pay an attorney for the same information. They can also provide sample language and procedures to assist you in meeting legal requirements regarding employee management to prevent future “difficulty” issues.
Ms. Schaefer mentions “Insufficient Capital” as the third reason why businesses fail. Have you ever seen a business fail because it had too much capital? This is where your agent can help you steer your business out of trouble. An unforeseen financial loss is one of the biggest reasons you may not have enough capital. An assessment of your business income policy can help you avoid making this mistake. Your business’s disability coverage is called business income insurance. This insurance protects you from losing income due to damage that temporarily disables or limits your business.
Although “Location is everything” may seem important and a given for most companies, an agent can help ensure that you have a safe and secure location. They will also make sure that your workstations and equipment are ergonomically correct to safeguard the most valuable asset in any business: their employees. Ergonomics can be defined as the science of creating the workplace, job and equipment to suit the worker. It is often overlooked in many business settings.
The Insurance Agent can also look at a company’s insurance policies for “product liability” or “errors and mistakes”. If your product could cause injury to someone, then you need product liability coverage. If you make a mistake, or if you do not follow through with something that could cause harm to a client or customer, Errors & Omissions coverage will protect you.
It is not enough just to be aware of the seven most common reasons businesses fail. You have to take action. It is important to gather information and seek out advice professionals.
These suggestions and ideas can help you protect your business to ensure it continues to prosper.