Business Interruption Insurance - Things Every Business Needs to Know

Any business, small, medium or large is susceptible to damages from events like natural calamities, or man-made disasters. They may be forced to shut down their business due to lack of sufficient financial support. During these situations, they need to have a backing that covers for the loss of income. Business interruption insurance is one such solution to cover up for lost income.

In this article, we will discuss about the importance of business interruption insurance and why every business should be prepared for the unpredicted.

Business interruption insurance should be a crucial part of every business owner's plan. Business interruption insurance acts as a supporting system for your business when it is closed down due to unexpected events such as natural disasters, accidents or any unforeseen risks.

Business interruption insurance provides sufficient coverage when your business is not in action and will help you pay the ongoing expenses. In this way, you will get some time in rebuilding your business. Small businesses who do not purchase this insurance would suffer closure soon because the expenditure for revival is beyond their financial capacity.

Can be an add-on to any policy

This insurance is generally not sold as a separate policy; you need to buy it in addition to your existing liability insurance or any other insurance policy. It comes as a rider, or additional benefit with others like property insurance. This add-on policy to your excising policy will help you have liquid cash in hand, even when your business is not operating.

Coverage offered by the policy

If your business is unable to function as a result of damages to the business premises and loss of revenue, this insurance would be helpful. Further, there can be interruptions because of a general economic downturn. In all the cases, as there is no transaction, there is loss to the business. However, you have to bear the essential cost. Under these situations, business interruption insurance will cover your business continuity operation expenses like the electricity bills, staff wages and rent, repairs of damaged equipment, etc.

Every business should consider business interruption insurance

Whether, it is small or a large business, it is very much essential for every business to be covered under business interruption insurance for a secured and risk-free business. In business, losses are not predictable. During these difficult situations, this coverage will help you in rebuilding your business premises and also your self-confidence.

It is advised to buy this insurance through an insurance brokerage firm for better deals. But selecting an insurance brokerage or insurance adviser for your business may, however, be tedious, but you need to figure out the best brokerage firm that can offer you better deals. You can do this by researching on the Internet.

And before buying business interruption insurance policy, you need to discuss with the brokerage firm the things that are included and excluded in your policy. Choose a brokerage firm that will offer most of the things at a minimal cost compared to other brokerages and that promises to protect your business at times of adversity.

A Good Start-Up Is Necessary for Business

Starting a business can evoke a lot of emotions be it fear, anxiety, excitement, or sense of satisfaction. The intent and uttermost important goal is to make money and be successful. No one goes into business expecting to fail. It takes a lot of planning and arranging to get things going. While there are factors that will be out of your control, those that you can handle must be dealt with accordingly. Some people think that because they have a good idea or products that people want it guarantees success. However, they did not go beyond to think of how to advertise and promote their idea or products. Another overlooked factor is start-up costs. How are they going to pay for the expenses of the business until they get customers? Would you buy a vehicle with a bad engine even though it looks good? Just like a beautiful car with a bad engine, a business without good planning, sufficient capital, and other necessities for business works the same. The idea and products are great but the marketing, capital, search engine optimization for the website, and other factors(the engine) are not so well. A business(the vehicle) like this does not last long before you are fed up, in debt, out of money trying to fix problems, and ready to quit. That's why a good start-up is necessary for business.

A good start-up consists of:

FIGURE IT OUT

Take time to think about what you would like to do. What are you good at and how could others benefit from it. Use your hobbies, interests, experience, and skills to your advantage. I am pretty sure more than a few business ideas will come to mind. When your mind begins to stream ideas, be sure to write them down. You may have a few ideas you find suitable for a business but I encourage you to stick to one. Take on one project at a time.

PLANNING

Once you are set on an idea, it is time to plan. A small business does not only have to get up and running, it has to compete with other well-known, maybe bigger, businesses within its industry. Planning is essential. A business plan is a directional compass. A good business plan could show both opportunity and opposition depending on how detailed it is. You can minimize risk monetarily and legally as well. Business planning will help you decide whether proceeding with your idea(s) are even worth it. A plan answers these questions too, "Is there a market for the product or service?" "Who is the competition?" "How much capital is needed?" Creating a business plan will be to your benefit most importantly because helps to get financing from investors. Business plans shows you have taken time to consider all or most of the aspects of owning a business and are serious about becoming an entrepreneur.

DO IT

You have the money to get started so, do it. If you have a testable product, do not be afraid to let people try it. Ask for feedback on services and product quality. For the duration of being in business especially while building a name for yourself, always look for ways to improve. Refer to your plan as needed. Execute your plan and you should be fine.

BE LEGIT

Whether your business is online or a storefront, you have to be legit. That means have ALL your paperwork in order. Make sure you have your licenses and permits before you begin business. For those that choose to start without it, get it ASAP. Not registering your business could result in fines or having your establishment shut down. Business filing is important. This is not to be overlooked or put off.

MARKETING

Promote your brand. The more people who know what you have to sell and who you are, the better. In my opinion, most small businesses fail because they do not advertise enough. Traditional forms of advertisement--newspaper ads, local phonebook, flyers, and handouts are okay. Advertising those ways are usually time consuming, costly, and bring minimal results. I believe the best way to market your products and services is online marketing. Internet marketing reaches thousands to millions of people a day. What I consider to be awesome is that you can target the market in which you wish to sell to. Target marketing brings to customers that are interested to what you have to offer, not those that are not looking to purchase or not in need of your service. Online marketing makes your service/products visible locally and regionally. That is a far wider range of exposure than what traditional advertising can bring and often times less expensive.

WEB DESIGN

Having a website is a must have for any business. When you are sleeping, it is working and advertising for you. No matter what time of day it is you could still make money. To setup a website is fairly cheap. You can do it yourself or have it professionally done for an affordable price. Most people, when they are looking for services and especially products, go to the web. The internet has become the most used source for information. Think about it. The phonebook is not extinct but the least used. Search engines--Google, Bing, Yahoo, Ask are what is most popular and often used. Your business website should be listed there. Websites provide flexibility and convenience. People who do not have means of transportation to come to your physical location, work late, or live miles away have a way to still benefit from your product or service via your website. From your website, millions can get to know who you are, what you sell, what you do, compare, spread the word about you, and support your brand if they like you.

PAYMENT FLEXIBILITY

Make ways to get paid. Sure, you could accept cash only but what about credit card payments. How many people walk around with cash these days? Most purchases are made with a credit card because it is convenient, fast, and flexible for customers ( Accept Cards ). Yes, there are fees involved when accepting credit cards but it is well worth it. When a customer walks into your business they automatically assume you accept credit cards as a form payment. That assumption is acceptable because what credible business doesn't... There is no place that I know that does not accept cards. SCENARIO: Customers come in and they look around and find something they like. The customer comes to the register to pay but only has a card. What then? The customer will either leave and you lose a sale(money) or walk around to find an ATM which would be a bad first impression for your business. If you do not want to accept cards, okay. Give your customers options though. At least have an ATM in the store for them to go to so that they are not too inconvenienced or compelled to walk away. You are in business to make money. The more ways for you to get paid, the better.

The Importance of Business Valuation for Small and Mid-Sized Companies

Business valuation is an important aspect of owning a business, particularly for small- and mid-sized business owners. If, at any given time, a business owner does not have a fairly well-defined idea of what his or her business is worth, they are limited in what they can do to increase the value of their business over time. Preparing an exit plan is critical for business owners even when they do not foresee selling for many years to come because when that time comes, every owner wants to get the best possible price for their life's work.

Ultimately, every business changes hands for any number of reasons - the owner or owners' retire, profit fails to meet expectation, the owner becomes burned-out and desires a lifestyle change, one partner wants to buy out another, death, lack of heirs - you get the picture. In the meantime, determining the future value of the business begins with the value of the business in the current market to serve as a baseline.

Business valuation is best conducted by a team of professionals including a commercial broker, accountant, and attorney, all experienced at determining the market value of a business and how to improve that value. Business owners should take a hands-on approach to the process of business valuation so they understand how to maximize the future business value.

An initial valuation establishes a baseline from which the value of the business can be adjusted by different business decisions. Fundamentally, the appraisal process considers the current business assets, the value of the business to outside parties (including the brand, customer demand, and profits), and comparisons of a similar businesses in the market. This formula will differ for every business based on its size, location, industry, and more.

Included in the assets are hard assets such as the building (if owned by the business), machinery, technology, and such. In addition, less tangible assets are part of the valuation such as historical and projected earnings, size of the customer base and their buying patterns, patents, trademarks, copy writes, and brand value. Another aspect of the valuation process is identifying the unique advantages and disadvantages of a particular business such as how well the business has developed a niche for itself in the relevant industry, what kind of reputation the business has, and what the business on-line reputation is like.

The valuation methodology is based on the use of specific theoretical underpinnings and related formulas that your specific valuation professional adheres to. One you have arrived at a base line for the value of your business, you can address factors that will increase its value. If you do not plan to sell for some time, you should develop short- and long-term plans to increase the market value. On the other hand, if you are anxious to sell in the near future, your commercial broker can tell you of ways to increase the value over the short-term, before it goes on the market. The speed with which you want to sell will also play a part in the selling price you arrive at.

Reaping the Benefits of Working With a Volunteer Business Mentor

Everyone in business should consider having access to a volunteer business mentor. Someone who has "been there, done that" and is willing and able to share their wisdom with you on an ongoing basis. Working with a business mentor is particularly useful when starting a new business or looking to grow a business in a down economy. An experienced mentor can not only offer useful guidance on a range of business management issues, but s/he can be a valuable sounding board for testing out new ideas or hashing over periodic business challenges.

Fortunately, there are many different sources to choose from today where you can evaluate and secure experienced business mentoring at no- or low-cost.

Public Mentoring Agencies

For example, SCORE Counselors to America's Small Business (SCORE) has been around for over forty-five years and offers access to over 12,000 volunteer business mentors throughout the United States. These individuals offer mentoring expertise in more than 600 business disciplinary skill areas. You can work with a SCORE mentor face-to-face through local Chapter offices, online through email communications, or a combination of both. Many SCORE Chapters provide a detailed profile of each volunteer mentor's area of expertise. This allows you to review which mentor you view best matches your business interests and needs.

Small Business Development Centers (SBDCs) also offer access to no-cost experienced business mentors across the United States. SBDCs operate through academic institutions and state economic development agencies. In addition to no-cost consultation, SBDCs also offer low-cost training in a variety of business disciplinary areas.

Corporate Volunteer Mentors

Corporations are also making it possible for their employees to volunteer their time to mentor people looking to start and grow business ventures. This avenue of mentoring may be particularly useful where the volunteer mentor offers access to a broad industry-specific network or certain technology solutions that can help an up and coming entrepreneur tap new markets or operate more efficiently. MicroMentor, a nonprofit agency, is one example of this type of no-cost business mentoring. By visiting MicroMentor, you can search profiles of available mentors and work with one or multiple mentors to help you start and grow your venture.

Special Interest Mentors

Mentoring relationships are also available for a variety of special interest groups, such as Veterans, women, minorities and individuals with disabilities. Many of these mentoring sources are also available at no cost. For a nominal cost, typically referred to as a membership fee, there are a wide range of special interest associations that provide access to mentors, as well as other entrepreneurial training and development resources.

A nonprofit organization called American Corporate Partners (ACP), offers free career counseling and mentoring to Veterans through volunteers from corporations and universities. Veterans interested in pursuing entrepreneurial interests are provided with business mentoring support through the ACP web site as well as through select mentor skill sets. There is also an Office of Veterans Business Development (OVBD) that hosts a Veterans Business Outreach Program (VBOP) where veterans are provided with on-site visits from experienced mentors who provide assistance with business planning and financial management. OVBD is available by visiting the U.S. Small Business Administration (SBA) web site and selecting Veteran Business Outreach Centers under the Local Resources dropdown menu.

Business mentors focused on assisting women entrepreneurs include Women's Business Centers (WBCs). Like SCORE, SBDCs, and OVBD, WBCs are in part, funded through the U.S. Small Business Administration (SBA). WBCs are managed through the Office of Women's Business Ownership (OWBO) and may be accessed by visiting the U.S. SBA web site and choosing Women's Business Centers under the Local Resources menu option.

Mentoring for various minority owned business interests is fostered through the Minority Business Development Agency (MBDA), which is part of the U.S. Department of Commerce. MBDA is the only federal agency created specifically to support entrepreneurial development and growth for minority-owned businesses in America. In addition to providing referrals free of charge to mentors through over forty Minority Business Development Centers (MBDCs), MBDA offers other business support services at nominal fees.

For individuals with disabilities, business mentorships and related entrepreneurial development training services are available through state-based vocational rehabilitation programs typically run through the state Department of Education. Mentoring guidance focuses on assisting individuals with physical or mental disabilities in living more independently through the pursuit of employment, self-employment or venture creation and growth. A Google search for vocational rehabilitation followed by the name of your state will return where in your state you may connect with mentoring services of this nature.

The Right Fit

In summary, working with a volunteer business mentor offers many benefits and rewards. The key is to be sure that you secure the right mentor for the right reason at the right time. Mentoring relationships that offer a combination of structured business guidance based around your specific interests and needs, as well as unstructured brainstorming opportunities tend to provide the best return for your time and energy.

What the New "Netpreneur" Must Consider - A Business Checklist

Business Checklist: Define Your Product or Products

What is it you are actually selling? Is this a physical product that has to be packaged and shipped, or an "Information Product" that must be downloaded?

Physical Product

How will it be manufactured?

How will it be shipped?

What packaging is necessary?

Are there any restrictions on content?

Are there any regulations that control this?

Will it be manufactured in house or outsourced?

Will I maintain stock or will it be custom made per customer?

What materials are necessary?

Where will I get the materials?

Will the product be fully assembled or in kit form?

What user instructions are necessary?

What required warnings must I include?

What patents for copyrights might be necessary?

Will the product be licensed?

Who will be my primary suppliers?

What is the warranty?

Information Products

What exactly is the product line selling?

While the product be available in online?

Will the customer be able to download the product?

What copyrights are necessary for that product?

What rights does the buyer have with the information product?

How will enforce the copyright?

Will I sell this product to others for resale?

What components are with the information product?

Educational materials?

Videos?

Marketing Materials?

Will the product be a subscription product?

Only online product also be available on CD/dvd or a physical package?

Other product be a computer program?

Who will do the program development?

How will all upgrades be handled?

What is the warranty?

Business Checklist: Determine the Market Geography and Demographics for Your Products/Services

Believe it or not, just because your business is primarily on the web, you must still consider the geographical considerations for your business. Rather than thinking in terms of physical location and distance to customers, you must now consider the international implications of doing business on the web.

In what countries will you be doing business?

Is your product of a legal to sell in all countries?

What are the import and export restrictions?

What countries do you not want to do business with?

What will be your base currency?

How will currency exchanges be handled?

What are the tax implications of international business?

Do I need to have a presence in every country that I market my product?

What are the business reporting requirements for each country I do business with?

If sued, will I need to go to court in that country?

Business Checklist: Determine Prices for Your Products/Services

Everything for sale is not $47 with an up-sell of $97. There is actual competition in the marketplace, because the marketplace is broader than just the internet. Before you can determine prices, you need to understand your target market and tangential markets that may have an effect on how you price your product. A more important question is. "What is the customer's perception of the value of your product and what you think that customer would be willing to pay"? Another question to ask would be "What would the customer have to pay or what would it cost this customer if they did NOT have your product?"

Market research. What are the prevailing prices for similar products and services?

What makes your product unique? Why would someone want to pay more for your product?

What are the costs of using your product?

What are the benefits of using your product?

What are the benefits of using your product as opposed to a competing product?

Is this a product that your customer would ask for or must you convince your customer that he needs this product?

Who is your competition?

Business Checklist: Determine Image You Want to Convey (in Light of your Target Market)

How to achieve that image though advertising, business cards and letterhead, brochures, office/store appearance, your appearance, etc.)

How many different types of exposure would you have with your customers?

Will you have face to face contact with your customers?

Will you conduct webinars for your customers?

Who would you want to be associated with in business that will give you a better image?

Business Checklist: Draft a Marketing Plan

Include the types of marketing, advertising, and promotions strategies you will use to reach each of your target markets.

Advertising

Direct mail

Mass media

Press releases

Internet Advertising

Web pages

Social media

Videos and YouTube

Business Checklist: Create Customer Order Collection Method

At some point you are going to need to take orders from customers.

How will this ordered be handled?

Who will handle the orders?

How will the orders be fulfilled?

What forms are necessary?

Will orders be taken over the web?

Business Checklist: Join Applicable Trade and Professional Associations

What trade associations or professional associations would apply to your new business?

How do you engage with those associations?

How much does it cost to be part of those associations?

What kinds of time commitments are required for these associations?

Where do the associations meet?

Business Checklist: Investigate the Cost of Advertising in Various Publications

Believe it or not, the local Yellow Pages may still be a viable channel for your advertising. Who else?

There are many yellow pages knockoffs out there. Which ones are worth subscribing to?

Business directories can provide an online presence and also free or low cost advertising.

Newspapers have gone, electronic. Consider placing ads in the local newspaper which will also give you an electronic presence for your news releases

Determine what activities in your company would actually warrant advertising or news releases.

To determine what prevents you can participate in that would give you advertising exposure.

What is the cost to participate in those events?

Business Checklist: Define Web-based Marketing and Advertising Strategies

Web based marketing is not all "viral", in your face offers. Again, your marketing and advertising strategies must reflect the image you wish to project. That image could be blatant, painting you as a 2 AM car salesman or infomercial spokesman, or could be subtle, intellectual, informed, and business like. Each approach has its merits and downsides. The one thing you must protect is your image: how OTHER PEOPLE see you.

Which internet mediums will you pursue?

What are your goals of Internet Marketing?

What is the audience you're attempting to engage?

What is the frequency of contact?

What is the cost of this contact?

How would you test the marketing mediums?

Business Checklist: Draft Sales Literature

Sales literature reflects not only your image but the image of your company and the image and perception of your products must be in line with those desired profiles.

Should you engage a professional image consultant?

Should you engage professional designers?

Should you outsource your literature distribution?

Business Checklist: Determine Need for Sales Force (In-House or Outsourced)

Do your products warrant an in-house or outsourced sales force?

What channels will you use to market your product?

We're product be direct marketing to customers?

Business to business?

For resale?

Through consolidators?

Big box retail?

Will your products be distributed to other channels?

Telemarketing?

This is just a memory jogger for you, to give you a start at creating an individualized Marketing Plan. In my experience, the entrepreneur is the visionary, but is probably too close to that vision that it is best to engage a third party, professional facilitator to help him answer these questions. The entrepreneur is generally so involved in the day to day fire fighting that they might gloss over the necessity for the level of detail required to answer these questions.

Unfortunately, the Marketing Plan is only one part of the whole package of business documentation that should be completed BEFORE you hang out a shingle. If your business requires funding from a bank, venture capitalist, or any other reputable source, the first thing they will ask for is documentation that shows you are a viable business, you have the proper business structure, licensing, and permits, have filed the appropriate statutory and regulatory documents, and have done your due diligence in creating a solid basis for your business.

Due to the detail necessary, and to be sure your business documents reflect your image in a professional way, you should consider engaging the Magic Triangle of Advisors:

An Attorney

An Accountant

A Business Consultant

I always add one more to this list if your business infrastructure is dependent on any web presence, servers, applications, PC hardware and software, tablets, and smartphones:

An IT Consultant

It is critical that these advisers have open lines of communication, and it is clear as to the responsibilities each is charged with to create the best singular outcome for you: a successful business.