Running your own business is risky – here’s how to protect yourself

Running your own business is risky – here’s how to protect yourself

One of the most ignored risk minimisation strategies for small businesses is insurance cover. For some reason, many business owners ignore the issue of insurance for their business, because after all – what can go wrong?

Well, let’s take a look at some of the main risks to small businesses, how they can affect your operations and profits and how to avoid the avalanche of catastrophes that can result from either having no insurance cover or being severely underinsured.

5 main risks to small businesses

Theft: Whether you operate from a retail store, office, clinic, warehouse or factory, burglars, customers and even employees can still cause a big dent in your profits. Employees can steal anything that isn’t nailed down, customers can lift your products from the shelves and burglars can do serious damage to your operations.
Vandalism: Whilst vandalism usually takes place to the exterior of buildings, signboards, machinery and vehicles can all be vandalised, even landscaping! Wilful destruction of property can cost a business a small fortune to repair and it needs to be repaired quickly, before it starts to impact your customers and your reputation.
Cyber attacks: The massive and continual increase in cyber attacks on Australian small businesses is something that you can try to prevent, but you can’t guarantee won’t happen to your business. The effects of hacking on the reputation of your business can be enormous, but it can also include loss of essential data, loss of profits and litigation. Costs can include compensation to affected customers, investigations and data recovery, fines and penalties, and crisis management.
Fire: What happens if there is a fire at your business’s property? Even a small fire can result in the closure of your business until the repairs are completed. A large fire that completely destroys your property can close your business for months and even years while you try to rebuild and replace lost equipment, stock and other items.
Floods: It can be something as simple as a dishwasher or washing machine flooding, broken water pipes or storm damage. Whatever the cause of the flooding, the cost of repairs and the cost of potentially closing your business while the repairs are undertaken can have a significant effect on your profits.

These five issues are just a snapshot of the risks to small businesses. There are also workers compensation costs for injuries at work, public liability, professional liability and product liability to consider.

You might also contemplate business interruption insurance that will cover lost profits in the event that you have to close your operations due to any of the above incidents. This type of insurance is just about essential for any business that operates from a physical location, which is just about every small business in Australia.

If you have the right insurances in place for your business, you can avoid these major financial losses. We recognise there is a lot to consider which is why our Insurance Advisernet Authorised Representatives are here to assist you. They are specialists when it comes to business insurance and make it their business to understand yours. Enquire about business insurance today.

General Advice Warning

The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.

SME Business Insurance

Business Insurance is used by many businesses, but it’s best suited to SME-type operators.

SME Business Insurance

What is SME Business Insurance?

Any business in Australia, including small to medium-sized businesses, will benefit from an added layer of financial security in the form of an SME Business Insurance cover. This provides owners and businesses with protection against financial risks and the loss of key assets. It also protects customers, employees, suppliers, and contractors.

Some types of insurance are mandatory, like Workers' Compensation, Professional Indemnity, or CTP Insurance for motor vehicles – these are called statutory insurance covers. Other types of insurance are optional, but they are important ways of reducing business risk and protecting your finances and assets.

What does SME Business Insurance cover?

Property Damage – cover ranges from fire, storm, lightning and other perils to any type of accidental loss or damage. The property insured includes damage to buildings, contents, stock, plant and equipment, raw materials, and consumer goods.
Business Interruption – covers weekly amounts or net profit loss and ongoing fixed costs following property loss or damage. Also referred to as Loss of Profits or Consequential Loss Insurance.
Burglary/Theft - covers break-in at the business premises and the damage is done, as well as theft of goods or stock;
Money - covers theft of money in various locations (during transit, in a locked safe, or in a private residence) at any time (within and outside business hours).
Liability - covers a variety of statutory and civil legal liability, including personal injury and property damage, environmental liability, management liability, statutory liability, professional liability, aviation, marine and motor vehicle-related liability;
General Property - covers specified portable property against accidental loss or damage once it is taken off the premises, within Australia or overseas;
Equipment - covers sudden internal derangement and accidental loss or damage to plant, equipment and machinery, as well as computer and other electronic equipment. Loss of stock and business interruption cover can also be part of this insurance.
Motor vehicle & mobile plant – covers registered and unregistered motor vehicles, mobile plant & equipment, farm equipment, construction plant, as well as attachments and trailers. This insurance can also cover loss of income, downtime and hire costs of replacement equipment.

Speak to an insurance expert

It is our business to understand your objectives, needs, financial situation and risk profile and provide you and your business with tailored risk and insurance advice.
This is how we work with your business:

1.   We analyse your objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions.
2.   With your input, we undertake risk assessments and conduct market research to determine the most suitable insurance product(s) for your key risk exposure.
3.   Your insurance adviser will present appropriate strategies and solutions and also negotiate and place insurance covers agreed.

Frequently Asked Questions

How can insurance help small businesses in Australia?
- In Australia, small businesses are encouraged to invest in business insurance to help protect their business from costly eventualities like damage to property and liability claims. Investing in a comprehensive yet affordable insurance policy promotes the continuity of the business in times of losses or great financial trouble.
What does SME stand for?
Small-to-medium enterprises (SMEs) are businesses whose revenue, number of employees and assets do not exceed a certain threshold. Each country or industry defines a set of criteria to determine whether an organisation falls under the SME category.
How can insurance help small entrepreneurs or SMEs, or how it relates to risk management?
Risk transfer is one of the treatment approaches in managing risks in business, and insurance is an example of risk transfer. It’s a strategy that SMEs employ to shift a risk or a liability from one party to another when that party specialises in managing a specific kind of risk/liability.
Why is insurance important for business owners?
Getting an insurance policy for your business is important, as it cushions or completely shields you from the hefty costs of certain unforeseen issues (accidents, damages to properties, effects of force), legal claims, and other liabilities. Without insurance, business owners might be forced to foot the bill out of their own pocket.