Your business safety net

Running a small business is engaging and enjoyable. We love the game, what we do, the people we meet and the buzz of being rewarded by our customers when they pay us.

It is so easy to forget that things can go wrong, and usually it won’t be our fault.

Suppose we might make a mistake which costs our client money. It does happen as no one is perfect, however much we guard against errors. Human nature being what it is, a customer might think we have made a mistake and cost them money, when we have not put a foot wrong. Either way, we need to be insured against action against us. Otherwise a vindictive client entirely in the wrong can cost us a lot of money and ruin our business. Professional indemnity insurance is essential and public liability insurance is important too.

Then again, how well are we insured against damage to our premises? Is our insurance up to date? Do we insure against loss by backing up all our data off-site?

Suppose our key staff have health issues and are off sick for a long time. What if we get sick and need to take time off? Are we insured to hire substitutes? Is our business income insured? Is our health insurance up-to-date?

Being insured for every eventuality sounds expensive, but when we think of the alternative of disaster and poverty we should grit our teeth and pay our premiums. Do you pay yours?

Should we buy really cheap services?


Professionally checked out?

Professionally checked out?

In the course of our business we are receive all sorts of offers. We get mail-shots through our letter boxes, we get emails and we receive telephone calls. Many of the offers sound very tempting, but do we know what we might get for the little money we are asked to pay?

Now some very professional businesses offer “cheap” services. What they mean by that is that they give a professional service provided by professional people within agreed fee levels, and clients know in advance what they are getting and paying for. If they decide they want more they can “upgrade”. That is fine. In fact it is an excellent business model.

However some business people look for what they think is the cheapest option without worrying whether those whom they might engage know what they are doing, and without considering their experience and qualifications.

The other day I was asked whether I knew anyone who could do property conveyancing very cheaply. Now many of us, myself included, are good at filling in forms, but only in our particular area of expertise. Would I know what I was doing if I had a go? No, I would not. But how would anyone know whether an unqualified cheap “bucket-shop” conveyancer was capable of asking the right questions and doing the job? Search me!

It reminds me of those people who buy a house or flat and do not have a proper survey, or they rely on the mortgage lender’s valuation survey report. The latter will not point out serious defects to the property which are in urgent need of repair; all it will say is whether the property is worth the money being lent to the applicant.

The point is that if you want a job done properly you must expect to pay a business suitably qualified professionally or by experience, and one that is properly insured as well. Do not be afraid to ask about their professional indemnity insurance.

After all, if you are let down, or something goes wrong, or maybe you buy a property that turns out to be falling down, you need proper recourse to recover your lost money. Better still, you need your work to be done properly in the first place, don’t you?

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Why we need the assurance of business insurance

26 Feb 12 upload 011It seems obvious that we should insure our houses and our house contents. We have to insure our cars by law. Strangely many people do not believe in insurance for their businesses.

Of course it is true that many contractors under the control of other people or businesses (such as builders) have to have their own Public Liability Insurance. Many business owners, worried about the cost, skimp on this. Yet the insurance is not expensive. The consequence of not having it can be catastrophic if a customer has an accident and sues, because the cost of defending can be disastrous.

If a mistake in the work we do can result in a loss to a client, we need to be insured against that. Professional Indemnity Insurance covering being sued for at least a few hundred thousand seem sensible. I wouldn’t be without mine, though, touch wood and taking care, I have never had a claim. Again, even if we have done nothing wrong, the cost of defending an action can be terribly expensive and destroy a business, and maybe our wealth.

If we have a business with particular employees or of course ourselves as owners, we can insure against loss of their services in what is known as key-person insurance. It is intended to compensate for business losses in case the important person dies or is unable to work again due to illness.

I insure against loss of business income if I were to be ill and unable to run my practice. Shouldn’t everyone?

You and I may never have a loss of someone’s services or be sued, but you never know. Most of us keep an umbrella handy, don’t we? Why should we leave our businesses and our income open to the elements?

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