Running a small business is a continuous juggling act of revenues and expenses, but cutting corners with small business insurance can cost more than the premiums.
Here are four simple ways to save money by correctly evaluating the degree and the extent of business insurance coverage needed:
1. Prioritize
Because each business form is different, it is important to perform a comprehensive inventory of your most valuable assets, as these will be considerably different from business to business.
For example, the traditional business structure will usually be most concerned with protecting the property, plant and equipment. These are the key assets on the balance sheet, which are used to evaluate the financial health of the company.
However, with the advent of the internet and the proliferation of intellectual property rights, many online companies’ most valuable assets are their intangible assets, i.e. their copyrights and/or their trade secrets.
The worst mistake you could make is to have excellent coverage on low-priority items, while your most valuable assets remain unprotected.
2. Research and Delegation
Business owners can save money by performing one of the most basic consumer precautions: Simply compare insurance. This will prevent your business from incurring the hidden expense of an insurance package that is not appropriate for your situation.
It can prevent you from missing out on a great deal from a competitor insurance company. Never be afraid to ask for a better deal from a competitor; they might just want your business enough to give it to you.
Other relevant delegation issues include:
- Performing a product-review style procedure comparing different business insurance products related to the most valuable assets. For many busy small business owners, this can take a considerable amount of time; good research always does.
- If you do not have the budget to hire an insurance broker, one of the best ways to mitigate this task is to focus on the essentials and to delegate the legwork. Focus on certain aspects of business insurance that are the most critical to your particular structure.
- Organize this information on a comparative list grid, such as in a Microsoft Excel template. You can then assign specific research tasks to administrative personnel. Make sure your company car fleet has proper car insurance!
- Collect information on the best types of policy for your specific industry without paying any extra fees. Insurance agents usually can advise you on the most relevant aspects of your business insurance needs in a complimentary phone call.
- Professional advisors should be familiar with the industry trends most related to your business size and structure. The best strategy: Be prepared for this call.
- Remember to research the mandatory state or local insurance laws, as these will need to be at the top of the list as non-optional expenses.
3. Company Comparison
This is where big financial decision-making and planning comes in. Far from being an isolated decision, the identification of areas of valuable assets, for business insurance purposes, should also become reflected in all future policies and decision-making affairs.
However, in the formative stages, in which many business owners shop for business insurance policies, it is too common to have discrepancies between company policy and the order of valuation on an insurance plan. This can easily be corrected once you are aware of the discrepancy.
For example, if a trade secret is being used by key employees as a matter of daily business affairs, the valuation of that trade secret as a principal item covered in the business insurance policy should alert management immediately.
They can then take the necessary precautions to ensure that there is an adequate non-disclosure policy in force, up-to-date, and legally binding, which will restrict such employees from jeopardizing a principal company asset.
Such a reminder will also ensure that the policy is fresh in the memory of the older employees, and is integrated into the company culture for the benefit of the newer employees. Asset protection is a currency.
4. Currency Evaluation
Cash flow is obviously important; however, most beginning businesses fail to perceive currency other than cash and credit. Pre-paid business insurance is listed as an asset on the company financial statements, and may have tax implications that could work in your favor.
Consulting a good accountant or financial advisor may help you position your balance sheet for the maximum return from tax-deductible expenses, which is a legal money-saver for those who exert the required effort.
Thinking Beyond the Box
Insured assets are, officially, the most valuable assets of the company. Insuring the most valuable assets of the business while maximizing the benefits of the tax code will reflect well on your financial statements. A strong balance sheet is a form of currency as potent as cash.
These are serious money-saving strategies that address the protection of your long-term assets, and are not restricted to the limited terms of short-term cash flows. By employing them, your business will achieve a better position in terms of the financial reality that cash is not always the best metric of how much money you have saved!
Author Bio: Melissa is a freelance writer for an insurance providers comparison website that is full of helpful insurance tips. When she is not helping small businesses with their insurance, she loves to take a break from it all and go snowboarding behind her house. She still is thinking about how to help others with their insurance while on the slopes.