Taking the Worry Out of Business by Mitigating Risks
There is nothing more satisfying than starting a business. It is likely to be a stressful start that has lots of ups and downs. There will probably be large sums of money at stake, and managing it successfully is all important. Often at the start of a business money flows out much faster than it flows in, and tight control is necessary. The new business is vulnerable from all sides at this point as often its very survival is in the hands of clients.
Risks come in many forms to a business and we are going to investigate some of them here. You will also find ways to mitigate these risks and so improve the chances that the business will flourish.
Employees
Any business that recruits staff will need employee’s liability insurance. Even if temporary, casual labour is used, they are working for the business and must be adequately covered. Litigation will bleed a new business dry if even the slightest injury is suffered during working hours.
Public
Public liability insurance will cover the business against lawsuits from anyone not employed by the company. This insurance is standard for every business and is inexpensive.
Members of the public look for any excuse to seek compensation, often with fictitious injuries. It has become a way of life for many.
Loans
Often a business is entirely reliant on finance during the first months, and a heavy loan will need to be taken out. Banks are not too happy about loaning money when there is no property on which to secure the loan. Insured loans come into play here.
Here’s an example of where an insured loan may be suitable. A recruitment agency opens and supplies workers to a factory. The workers need to be paid for the first month. Their wages are paid from a bank loan. The recruitment agency, after the first month, sends an invoice to the factory. The factory then has another thirty days to pay the invoice. That is two months that the recruitment agency is paying out wages with zero income.
It is not surprising that the banks require the recruitment agency to pay insurance on the loan.
International Trading
A business that exports goods to the rest of the world is especially vulnerable. If a client in another country declares bankruptcy, there is no recourse open to the supplier. Suitable credit insurance from What Is Credit Insurance will give protection to what is, potentially, a fatal position for a company to be in. This insurance is guaranteed to be paid within 30 days of a declaration of bankruptcy, so money can often be paid faster than the invoice due date. It would be foolish for any company to export without suitable protection.
Of course, the same insurance solution is available for domestic companies too and in this financial climate, protection is a wise move.
For anyone starting a business in this financial climate, the advice is to mitigate risks at every turn. There are a whole raft of insurances designed for every risk in business and the cost of insurance should be considered at the planning stage. Adequate protection increases the chance of success significantly.
Previous Posts: