Government statistics show the growth rate of small to medium businesses in the country is averaging at around 2.7% and they contribute nearly $418 billion to GDP so around 32% of Australia’s total economy.(Source:Small Business Counts Dec 2020). These figures show how important small businesses are and how they play a major role in keeping the nation’s economic growth on the up. As small businesses grow and evolve, managing the risks they face becomes of greater importance . A key factor to consider for evolving businesses is how to adapt insurance policies, inlcuding key person business insurance.
Review the List of Key Personnel
You may have started your business as a small initiative with a colleague who helped turn your vision into reality but what happens as the business starts to develop? As your customer base increases you need to take on more key personnel to keep one step ahead of consumer needs. If you specialise in a certain product or service, you need people with specific skills to ensure you can fulfil work requirements and keep the business ticking over. If one of them falls ills or has an accident, then you face the risk of not being able to continue operating while you try to recruit, unless you have a backup plan in place. Meanwhile, bills will always continue to mount unless you have a specific insurance policy in place that is adapted to meet your changing needs.
Ensure key Personnel are Covered Life Insurance
Key man insurance beneficiary policies are important to put in place to cover major illness or death of a key member of an organisation’s team. The beneficiary is the business who would then receive a fixed cost for financial losses once the claim had been approved the insurers. That sum of money can then be used to pay out for any losses such as cancelled contracts due to not having the key person in place. The business would be responsible for paying the insurance premiums in the first instance, but this would mitigate any loss to the organisation and ensure the company can continue to trade. The money could also be used to pay for a specialist staff to fill any holes left in an unplanned staff member’s absence. This allows for invaluable peace of mind in effectively mitigating the risks.
Review Employment Practices Liability INSURANCE
As you expand your business, even if this is moving from being a sole trader to employing a staff member, there are important requirements that should be taken into consideration. One such legal requirement is having insurance in place once you start to hire other people, especially in the event of legal proceeings occuring. In Australia, employers have to maintain a safe workplace and also maintain workers’ compensation insurance. This would come into force in the event of a workplace accident or incident.
Review Service Offer If Including Professional Advice Or Services
If you have started to make a name for yourself within your field of expertise and are now expanding to offer advisory services, then you need to discuss your requirements for professional indemnity insurance. Customers who perceive that they have been given incorrect advice a professional could very well attempt to sue the organisation to receive compensation. Professional indemnity insurance should be in place if advisory services are offered. Again, this is often a legal requirement for many professional practitioners particularly in the medical and health sector.
Discuss Your Requirements With a Professional Insurance Company
In the same way that you started with a business plan looking at strengths, weaknesses, opportunities, and threats (also known as a SWOT analysis), it is a good idea to do the same when planning for business growth. Getting someone to review the threats or risks to growth is important, particularly if they are external to the business and are experts in risk mitigation. If growing the company means putting in place a hierarchy of staff, they can advise you on how to cover the risks involved in taking on new staff and putting structures in place. This allows you to get on with what you do best, secure in the knowledge that insurance policies, such as key person business insurance will reduce your risk and protect your company as it grows.