The Small Business Protection You Need | The Hartford (2024)

When you start a business, the biggest financial risk is running out of cash before you can prove your success. You can avoid this by planning now to get ahead of the revenue growth curve.

As a small business owner, cash flow is at the heart of almost everything you do and think about. You’ll need a solid financial plan that includes your fixed and variable costs, as well as expected revenue and growth. This allows you to forecast money coming in and out over the months and years.

You can also use your financial plan to assess any financing or fundraising needs. This ensures you can cover your expenses until your business starts adequately generating recurring revenue. Consider all possible sources of capital, including:

• Bank loans
• Private investors
• Small business grants

Always try to protect your personal assets. You should only use your personal funds as a last resort. Putting your personal finances on the line adds more risk.

Lawsuits are rather common these days and pose a serious risk to business owners. Not only can legal fees be extremely costly, but they can also damage your reputation.

Remember the story of how one consumer sued McDonald’s after burning herself with hot coffee in 1992? This was so costly for McDonald’s that food service companies took notice. In hopes of avoiding similar legal action, they’ve explicitly labeled hot items ever since. Legal risks, like the one McDonald’s faced, can pop up in unexpected ways. Some other legal risks to consider include:

• Copyright and IP infringements
• Defective products
• Slips and falls at the workplace

You should research a law firm that specializes in your field to help stay protected from legal risks. They can provide legal advice,help you navigate any legal issues, or help oversee legal contracts, such as hold harmless agreements.

Most small business owners need business insurance. These coverages can help protect your business from claims or if your business is sued. They’re also an effective way to future proof your business operation. Business insurance can also be tailored to fit a variety of operating models and types of businesses. Some of the most popular options to select are:

• Professional liability insurance, which helps cover any business lawsuits claiming errors or omissions in the products or services you provide
• General liability insurance for help covering property damage and bodily injury claims.Liability claims from work done away from your location can also be covered under a coverage known as products-completed operations coverage.
• Business income insurance to help replace lost income if you can’t operate because of covered property damage or theft

One of the most important marketing strategies is building and maintaining your reputation. Your business’ reputation is important for encouraging repeat business and gaining new customers. If your company is going through a digital transformation, it’s also important to focus on building a strong reputation on social media platforms. Some key elements that create a strong reputation include:

• Having small business bonds and insurance​
• Being honest with customers
• Providing quality products
• Delivering products and services on time
• Prioritizing customer experiences

Remember, strong reputations lead to successful businesses in the long term.

Keeping your personal assets separate from your business is important. For instance, many small businesses begin as sole proprietorships because they’re not as expensive to start as other business models. With these businesses, there is no legal distinction between the owner and the business itself.

While these are easy to set up, if a lawsuit is filed against you, your personal assets have no legal protection. This means your personal assets may have to pay for some or all of the claim’s costs. To avoid this, you can choose a business structure like a limited liability company (LLC). This structure does separate your personal assets from any lawsuits filed against your business.

Your employees are central to the success of your business. That’s why you need to make sure you can trust them. Two big staffing risks you could face include employees:

• Suing you if they feel you’ve infringed on their rights
• Misrepresenting your business

Once you bring people onboard, you’ll want to provide a safe and comfortable working environment. In addition to this, you’ll also want to:

Aside from cash and people, your next biggest asset is your business’ property. This not only includes the physical location from which you operate, but also any equipment and inventory you own. Protecting your business property against damage, destruction and theft is critical.

While no one wants to think about catastrophic events that could put you out of business, they can happen. Failing to prepare for these risks could set you up for a devastating loss – something your small business may not be able to survive. Taking inventory of your business property can be helpful in the event of a loss. You can also put a contingency plan in place.

A solution to pending risk is insurance coverage. For instance,commercial property insurance can be purchased separately or as part of a Business Owner’s Policy (BOP). Your BOP policy also includes general liability insurance, which can help cover you if someone is injured at your business. The BOP also includes business income insurance. This can help pay for lost income if you’re forced to shut down due to covered property damage.

There are many optional extras for this type of policy. An insurance agent can help make sure you get the right coverage for your needs.

Small Business Insurance Cost

What Types of Insurance Does a Small Business Need?

Liability Insurance for Small Business