6 risks small business owners face when they grow
Most small businesses expect to grow in 2017. With that growth, however, come risks.
According to Insureon.com, 82 percent of small businesses are planning at least one type of growth this year – and many are planning to grow in multiple ways. The commercial insurance agency surveyed 1,006 small business owners after the election last year on their expectations for 2017.
The chart below breaks down the types of growth the small business owners surveyed say they expect this year:
However, there’s a downside to growth. Small business owners expose themselves to added liability whenever they expand. Here’s a look at how each of the growth metrics we asked about will affect risk exposure in 2017.
Hiring an employee
One-third of respondents plan to bring a new employee on board this year. While this is an excellent indicator of overall business health, it also means as many as 33 percent of small businesses will need to update their Workers’ Compensation Insurance in 2017.
Moving to a new location
More than one in five respondents (23 percent) plan on moving to a new office space in 2017. That suggests growth, whether the move is from a home office to a commercial building or from an existing office to a bigger one. Both General Liability Insurance and Commercial Property Insurance (often bundled together in a Business Owner’s Policy) are tied to location, though, so anyone filling out a change-of-address form should update these policies with their agent.
Offering a new service
Thirty percent of respondents plan to add a service in 2017. A savvy growth move, expanding service offerings can help attract new clients and increase revenue from existing clients. From a risk management perspective, updating Professional Liability Insurance is crucial because new services may come with new risks. The update may not change much about the policy or its price, but it’s a good way to make sure a business is still covered as its business evolves.
Selling a new product
Thirty-four percent of respondents, or just over one in three, plan to introduce a new product this year. As part of this expansion, business owners may need to update the Product Liability Insurance portion of their General Liability Insurance. That’s the part of the policy that offers protection if a product injures a customer or makes them ill.
Buying new equipment or furniture
A whopping 58 percent of respondents plan to buy new gear in 2017. If those items are valuable, business owners should verify that their Business Owner’s Policy or Commercial Property Insurance policy has adequate limits to cover them.
No plans for growth in 2017
For the 18 percent of business owners who don’t plan on any of the growth discussed, their current small business insurance will likely be sufficient — unless they’re among the 75 percent of businesses that are underinsured. Bottom line: if you’re doing other housekeeping work at year end, verifying that your insurance is up to date is a smart move.
Article by CATERINA PONTORIERO, PROPERTYCASUALTY360.COM
