Direct Line for Business heads to Elite Business Live
By Nick Breton, Head of Direct Line for Business in For Small Businesses.
Last week, I attended the first day of Elite Business Live at the ExCeL Centre to talk about small business growth and small business insurance.
Small businesses seem to be facing a lot of issues at the moment. Firstly, they have to deal with day-to-day problems such as lack of access to finance, cashflow issues, problems finding and retaining skilled staff and workplace costs.
On top of that, they also have to contend with the uncertainty of what Brexit will mean in the future.
There could be significant changes on the horizon, so it's important for small business owners to get their businesses in order and put the relevant safeguards in place.
But while it may be quite an uncertain time for small businesses, there are steps that you can take to safeguard your business. Securing the correct type of insurance for your business being one of them.
Why is business insurance important?
Accidents happen all the time and if one occurs as a result of your business activities, it could have a significant impact on your business.
Your home contents and car insurance won't cover business-related assets. On top of this, your stock, computing equipment, professional equipment and even your profits will be insured only if you take out a specialised home business insurance policy.
If a claim is brought against your business and you don't have the right type of business insurance in place, the cost of any compensation that is awarded will come directly from your business. So making sure that you're covered is crucial to safeguarding your business.
What types of insurance do I need?
If you employ any staff in the UK, you're legally required to take out employer's liability insurance, so this is a must if you have employees.
On top of this, there are a range of other types of business insurance that you may want to consider including:
- Public liability insurance: Having public liability insurance means you'll be covered if an injury or accident happens to a member of the public on your premises. For example, if you or an employee damaged an expensive ornament while visiting a client, they could make a claim against you for the cost of repairing or replacing damaged property.
- Professional indemnity insurance: If you provide professional services, advice, consultancy or designs for clients, or have access to their sensitive information, then professional indemnity insurance could be a wise investment. This can cover your business if a client claims that there is a problem with your work, for example, it is deemed to have led to financial loss or caused reputational damage. It can also cover compensation awarded to correct a mistake or settle a claim, and any legal defence costs accrued when defending your business.
Why might I need home business insurance?
It's a common misconception that if you run a business from your home, you could be covered on your home insurance. So if you run your business from your home, you will need to take out a specialised business insurance policy.
Fortunately, home business insurance covers your equipment and other business materials while at your home. With home business insurance you will also be covered for loss of income should you not be able to trade because of an insured event, such as a fire or flood.
What else do I need to consider when starting my own small business?
Although making sure that you have the right business insurance in place is very important, it's not the only thing you need to bear in mind when starting your own business.
Earlier in the year we carried out some research to find out what small business owners would do differently if they started a new business.
The results revealed that many entrepreneurs and small business owners would focus on planning, research and collaboration if they were to start their business again. Here are some top tips for new businesses based on our research:
- Know your market – About 17 per cent of the entrepreneurs and small business owners that we spoke to said that they would do more research into their chosen market if they were to start a new business. This included researching competitors, networking and developing an understanding of related issues such as tax and recruiting issues. So if you're just starting up, take some time to know who it is that you'll be trying to reach with your business.
- Slow down and plan your approach - 21 per cent of the business owners that we spoke to said that they would change how they approached their start-up. Whether working part-time while building up the business, growing their business more steadily, or simply starting sooner, the way you approach your business can have a long-lasting impact on its success. So make sure to pace yourself at the beginning.
- Don't be afraid to ask for help – One in ten (about 11 per cent) of the small business owners that we spoke to said that they would ask for help more if they were starting their business again. Starting up your own business can be a liberating experience, but this doesn't mean that you have to go it alone. If you're feeling overwhelmed, there are channels available to help ease the pressure including mentors, financial advisers and even your business associates.
- Manage your finances – Whether sourcing funding or getting an accountant, it's very important for start-ups to have a good understanding of their financing. Around 17 per cent of the small business owners that we spoke to said that they wish they had invested more in the developmental stage of their business. So make sure to get a hold of your finances early on.
What legal documentation do I need when starting my own business?
Complying with the law is critical for small businesses.
Partnership agreements, employment contracts, and health & safety regulations are all types of legal documents small businesses need to be thinking of. Not having the right documents could put your business at risk for a range of potentially devastating legal issues.
Usually, having the right legal documents in place for your business involves a costly and time-consuming meeting with a solicitor to make sure your business is covered for any legal disputes. For example, employment agreements can cost £500, while debt collection letters for unpaid invoices can add up to £210 each.
There's a lot to think about when starting and running your own business. By having all the relevant safeguards in place, your small business can avoid any capital losses in the future through unexpected accidents or events.