David Hing is the blog editor of YOUR Insurance, which is a broker that specializes in public liability insurance for small businesses.
Hubris led to a lack of lifeboats on the Titanic. The tragedy resulting from this towering arrogance and idiotic-in-hindsight decision has been marked out as a significant lesson from history. It’s obvious why a huge cruise liner needs lifeboats, even if it wasn’t set to journey through hull-tearing-iceberg filled waters, but some risks are less easy to spot.
The smaller and more abstract risks get, the harder they can be to acknowledge. Scaling things down from obvious-in-hindsight oversights like the Titanic’s lack of sufficient lifeboats, small businesses often suffer from a lack of foresight. From time to time, the owners of these small companies should allow their imaginations to venture into more pessimistic territory.
A surprising number of people can’t think of anything in their business they would need to insure. In a recent survey, 23% of small business owners couldn’t think of any risks that their businesses might face. Those that do see risks have a tendency to only see those tied to the economy or their own abilities as a leader, which of course most small business owners are confident about, at least outwardly. Many probably only view any potential failure of their business as purely at the hands of bad luck.
If I were to put my wannabe-psychologist hat on for a minute, I would suspect this reluctance to acknowledge risk has something to do with our ability to fall into a routine, especially when it comes to work. When instilled with a sense of routine, even if you’ve broken away from the treadmill of a regular work life and branched out to run your own company, it can be difficult to envision anything massively upsetting the regular course of your day-to-day existence.
When 9,999 days pass with nothing untoward happening, you could be forgiven for not expecting anything spectacular to go wrong on day 10,000. Often, the odds of disaster striking you are indeed low, but you need to ask if it is a gamble that you can really afford to take. It might not be as drastic as neglecting to stock lifeboats, but even small disasters can have long reaching consequences.
I’m straying closer and closer to traditional scare tactics at the moment, so I will endeavor to prevent myself falling into that particular hole, but it is worth bearing in mind the events that conspire to upset your regular business routine.
On the plain bad luck side of things, accidents or natural disasters can prevent you from trading or your customers from reaching your doors. This could also happen to a key supplier which can have a negative effect on you—and there might very well be an insurance policy that could help you out with this depending on what you’re worried about. Something like business interruption coverage might be able to put your mind at rest – it doesn’t cover everything, but clients are often surprised by what it can cover.
Then there are issues arising from third parties. You can’t control nature and the forces of bad luck, but you also can’t control the force of nature that is other people. Customers might take you to court if they become injured on your property and employees could take you to court if they are injured as a result of things you’ve asked them to do. What you’re liable to pay if these cases don’t go your way can reach into the millions, but can be covered by a straightforward public liability insurance or employers’ liability insurance policy.
If you can’t think of anything that could damage your business or cause you to stumble on your road to success, you are not thinking hard enough. Ignorance might be bliss, but it’s just plain responsible to be informed about the risks you face and to arm yourself with the knowledge that you need to deal with it.
You might not have given it much thought, but you’re a fool if you know there are icebergs lurking out there that can rip a hole in your business. It might be that with a bit of thought you can identify a few small risks that you can live with, but if not, be aware that there are simple and affordable policies that you can look into that can act as adequate lifeboats for your company to get you started.