Small biz owners: protect your investment!

For many Colorado business owners, 2009 was full of challenges. In addition to difficult economic conditions, a lot of small business owners found securing the financing needed to maintain and expand their business a daunting task.

As we approach the second quarter of 2010, it certainly feels like things are getting better for small businesses in the state. At the same time, however, unemployment remains relatively high. According to the Bureau of Labor Statistics, unemployment in Colorado registered 7.5 percent at the end of 2009.

Many of those who have lost their jobs are starting their own businesses, seeking to take advantage of improved economic conditions. These men and women view their situation as an opportunity to venture out on their own. These new entrepreneurs can help drive the overall economic rebound in the state.

Growth and expansion are goals of just about every small business owner. Some of those that are starting new businesses now will launch very successful ventures that will yield strong profits for years to come. Unfortunately, however, statistics show that many new businesses will not last past the first few years.

There are many reasons that a business could fail – from changing consumer tastes, to increased competition to poor leadership. While strategic, forward-thinking small business owners may properly manage their risks to increase the likelihood that their business will survive and thrive, many new entrepreneurs are less experienced in managing their risks.

When starting a business an entrepreneur will generally consult with an independent insurance agent. That initial meeting usually concludes with the purchase of a comprehensive business insurance program, which is typically comprised of several insurance policies. One of the key policies is often a Business Owners Policy, also known as a BOP. A standard BOP will generally offer a range of coverages, including property, general liability and crime.

Another key coverage included in most BOP policies is business interruption insurance, which will provide the owner with a stream of revenue should a business be forced to shut down or suspend operations for a period of time due to a loss from an accident, catastrophe or other incident. Other key coverages for a small business owner can include policies for commercial automobile, worker’s compensation and umbrella or excess liability.

Business owners can tilt the odds in their favor for the long-term by following one simple rule – maintain an ongoing dialogue with service providers like bankers, attorneys and insurance agents throughout the growth process. Owners should regularly consult their accountants and attorneys as their business grows, but they should also remember to make their insurance agent a part of that inner circle of advisors.

An insurance agent can help the business owner refine his or her risk management strategy to help make sure the business is fully covered, particularly as it hits a fast-paced growth stage. The hazard of not having an ongoing dialogue with an insurance agent can mean being under-insured in the event of a disaster or other significant event.

The bright side of a strengthening economy is that some small business owners have the opportunity and ability to make investments in their businesses again, or for the first time, if they are starting a new business. These investments can come in the form of purchasing additional or upgraded equipment, moving to larger office space or making additional hires.

At this time of growth, owners should be even more diligent about maintaining contact with their insurance agent. Each of these investments should be reviewed with your agent so that proper changes are made on each policy to make sure coverage will be provided should an unanticipated disaster strike.

Every owner, both new and established, looks forward to the growth of their company. What they don’t look forward to is unanticipated disasters and accidents, but unfortunately, these things do happen. Colorado can be prone to severe thunderstorms during spring and summer months, heavy winds and hail, and of course, there are the issues beyond weather patterns that owners face. For example, no one can predict when a fire will take hold of an older building and devastate a business. These, and so many other unpredictables, are the very reason business owners should stay proactive with their business insurance programs.

Owners who are in regular contact with their agent have the opportunity to learn from that agent’s experience and best prepare for the unpredictable. These check-ins provide the opportunity to learn about new risk management techniques and can mean the difference between closing a business’s doors forever after a disaster, or forging ahead.

We all hope that improving economic conditions in Colorado mean brighter days ahead for small business in the state. As entrepreneurs and existing business owners make the most of these improved conditions, they will do well to keep their insurance agents apprised of their progress.

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