Expecting Success Also Means Preparing to Protect That Success

By on May 1, 2017

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Is your small business growing? Have you hired new employees, opened a new location, expanded your inventory, started selling products online? What if one of your key employees have an accident and can no longer perform a crucial function? What if your business grows beyond your wildest dreams only to be held back because you cannot get the additional life insurance your business needs to sustain growth and compete for quality employees.

No matter how it is you are growing, it is common for a successful small business to reap the rewards of success by expanding its scope. While expansion may be a good thing for your company, it also means you need to review and update your legal and insurance to protect any new assets.

Protect the Success of a Growing Business

As a business evolves over time, its commercial insurance needs change. Likewise, developments within the industry can also lead to a need for better or more customized coverage. For example, a small restaurant with a new P.O.S system may need to increase their property coverage to replace the value of any new equipment and computers which are damaged or stolen. They may also want to consider data protection insurance as cyber attacks on payments systems are increasingly common.

It is important to periodically review your coverage with agent and keep them posted on changes or growth so they can offer you the most appropriate products for your current business needs, and at the right price. The right tools can protect the value of your business, retain key employees or implement tax advantaged retirement benefits.

From local to global and practical to complex, each industry, market and business will require a unique set of protections — discuss your specific needs with your trusted agent or financial advisor. Here are some of the common insurance tools your growing business may need at various stages of growth:

Startup Companies May Need:

  • Special Research and Development (R&D) Insurance to protect new discoveries, patents, supply chains and income for continuing expenses.
  • Travel Protection or Foreign Workers’ Comp for key employees who are on the go visiting manufacturers or attending trade shows.

Cover their 24/7 access to a global medical assistance provider

  • Auto Insurance for business with a new fleet of vehicles or employees who drive in the course of performing their duties.
  • Key Person Insurance can protect a business whose growth is strongly dependent on the unique skill or service of one (or a few) person(s). This could be the founder, a CEO, the owner, or another important team member.
  • Life Insurance to protect business obligations, like mortgages and loans or the loss of key employees, and provide a source of retirement income for the owner.

As a business begins to commercialize, increase their employee pool to fall under a number of new regulations and earns more business income there are any number of policies available to mitigate risks and the financial effects of loss.

Moving from Small to Medium Size (or Larger) May Need:

  • Business Income Insurance can offer support (to the limit of the policy) for as long as it takes to restore your company to the level that would have existed had there been no loss. Adjust your coverage to account for any increases in business income, say from the success of a product or sale of a franchise, asset, etc..
  • Supply Chain Insurance to mitigate the risk to your bottom line if your supply chain is disrupted.
  • Equipment Breakdown Insurance helps to keep your business running, even if critical equipment suffers damage, but you need to keep your agent up to date on all major equipment purchases.
  • Errors and Omissions (E&O) Insurance can address economic burdens caused by product defects as well as failure to perform in accordance with an agreement or a contract. When legal liabilities increase the coverage needs to keep up with the potential cost of lawsuits.
  • Group Life Insurance can attract and retain desirable employees.
  • Owner Life Insurance can fund capital gains payments, offer access to investment options and high cash values. These policies can support plans for business continuation through shareholder buyouts, distribution of executive benefits or the execution of succession/exit plans upon the death or retirement of an owner.

Expanding and growing your small business is an exciting time for any business owner, but it is important to keep your insurance coverage up-to-date with your current needs. Cost and amount of coverage of policies vary among insurers. You should discuss your specific business risks and the types of insurance available with your insurance agent or broker, who can advise you on the exact types of insurance you should consider purchasing.

Ask Your Advisor About Choosing the Appropriate Business Structure

While insurance can help protect you from loss and liability, there may be other ways to protect your growing business. It may be worth considering forming a limited liability corporation (LLC) to protect your personal assets from creditors or a judgement seeking payment beyond your existing business income. The right type of business structure can be vital in protecting you, so be sure to ask your agent or trusted financial advisor for more information.

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About Harold Goldman

I am the founder of FinancialSafetyNet.org, and a Retirement Planning and Long-Term Care specialist. I am also the President of Emes Insurance Services, Inc., a Murrieta based insurance agency designed to help people with Retirement Planning and funding for College. I believe in educating my clients to become financially competent in an effort to develop plans for guaranteed income, protection against loss and tax-advantaged growth. To contact me Call (844)-376-2265

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