As a startup entrepreneur, your business will face a host of risks as it launches, ranging from financial to development and technology risks. For anyone looking to start a business, a key thing to know going in is that the landscape is constantly evolving, and as a result, new threats are always arising. Right from the inception, entrepreneurs need to take steps to safeguard their intellectual ideas and resulting property. Recent reports indicate almost 75 percent of businesses are classed as uninsured, while many small businesses continue to struggle with the costs of uninsured damages. As a result, many of the small businesses and startups in the country are operating daily with major blind spots and vulnerabilities that could spell the failure of their idea before they get a chance to get their business off the ground. As a startup entrepreneur, there are a few staple protection policies that could address this, and it begins with understanding the risks startups face in today’s competitive landscape.
Income Loss Insurance Coverage
Startups can come with a lot of unpredictability, including an uncertain timeline of profitability. With most startups being headed by sole-traders, the risk of your business being affected by unforeseen incidents such as illness or accidents on the job is heightened. Around 29 percent of America’s private-sector workforce, entrepreneurs included, do not have access to paid sick leave. As a result, your business hours and income can be affected. Income loss insurance compensates for the time needed to be taken away from the business and the resulting loss that your startup may suffer due to reduced opening hours, productivity or loss of sales.
Data Breach Insurance
In Verizon’s Data Breach Report for 2018, 58 percent of the victims of fraud were small businesses. Startups and small businesses find themselves increasingly vulnerable to cybercrime, including data theft particularly, since 54 percent of small businesses have a website and digital presence. Data breach insurance policies commonly cover the costs of investigating any data breach, resulting in lost revenue and damage to any hardware or software. In an increasingly digital landscape, startups must move to identify and protect themselves from threats both offline and online.
Property And Asset Coverage
For any startup, it is important to protect the assets that it invests in from the inception. This includes property insurance for any business premises, including storefront or warehouses used to manufacture or store company stock. Additional business assets including motor vehicles should also be included and covered in the event of accidents, natural disasters or theft. Finally, securing insurance coverage for any equipment can also be beneficial, particularly for the periods of use extending beyond the manufacturer’s warranty. By doing so, startups can partially offset the expenses incurred of any repairs needed to maintain the equipment.
Employers Liability And Individual Insurance
While on the topic of protecting your assets, don’t forget to protect a very important one: your human resources. Offering wide-ranging employee coverage to include health & dental insurance along with workers’ compensation insurance and life insurance can act as a key attractiveness factor when recruiting talent to join your business. Metlife’s study of employee benefits trends found that benefits such as a great insurance package rank higher than advancement opportunities in the eyes of employees and when creating employee loyalty. As a startup, you are also required to secure employer’s liability insurance from the time you decide to recruit your first staff. This protects your business from losses if an employee decides to claim/sue for compensation due to being injured on the job.
Professional Indemnity Coverage
Finally, as a startup offering a service or advice to the public, it’s recommended that you secure an insurance policy to protect yourself if the service your startup provides to a customer does not meet the standards it is meant to, or contains errors or omissions on your part. Professional indemnity insurance covers the cost of professional negligence, loss of goods or money resulting from your actions/service, and defamation or libel. While this type of insurance policy is only mandated in selected industries such as accountancy, it is highly recommended that startups secure a policy if they intend to provide a service to consumers.
At the end of the day, insuring your startup is simply about taking the steps to protect your idea and resources. Startups already face so many challenges starting from their launch. Implementing a few simple safeguards, such as securing the various insurance policies, is an easy way to reduce that vulnerability – of the business, its assets and its people.