Running your own small business can be a genuine joy if you care about your product and enjoy connecting with your local community. You’ll be able to set your own working hours as a small business owner and will find that running your own company gives you a greater sense of purpose.
However, one of the most common mistakes small businesses make is failing to purchase insurance. You need a robust insurance package when selling a product or service to consumers and should be prepared to defend your business when legal threats emerge.
Taking a proactive approach to insurance and legal protection can help you run a more efficient company, too. You’re far more likely to avoid accidents when you comply with the insurer’s expectations and can side-step human resource mishaps when you’ve worked closely with legal advisors.
Understanding the Importance of Insurance
Overlooking insurance is easily done when you’re running a small business. After all, you’re likely operating as your company’s CEO, COO, and CFO simultaneously. However, ignoring insurance is almost certain to doom the profitability of your small business in the long run. Your business needs insurance to cover the following:
- Legal Costs: Even if you’re innocent of wrongdoing, failing to account for the fees associated with legal action will undermine your small business’s profitability.
- Acts of God: Unexpected events — like lightning damage or floods — need to be paid for by someone. Insurance can protect your profits by covering the cost of inexplicable, improbable events.
- Financial Loss: Protecting your income as a small business owner is crucial. Insurance can cover the cost of accidents or illnesses that were no fault of your own and will compensate you for lost income.
Finding the right insurance package for your small business is crucial. Depending on the state that you live in, insurance may even be legally mandatory (meaning that failing to take out insurance will lead to penalties or fines). Taking out a robust insurance package will protect your firm against more common hazards like personal injury at work, property damage, invasion of privacy, and copyright infringements.
Employment Law
Understand employment law if you want to expand your business and take on some staff. Providing a safe, supportive environment can help you stay on the right side of the law and will improve your brand image in the community. Get the ball rolling by taking out an insurance policy that covers workers’ compensation claims. Workers compensation applies when employee experience:
- Lacerations or other injuries due to faulty equipment;
- Sprains and accidental strains when moving materials;
- Skin burns due to sun exposure, bright lights, flames, or electricity;
- Eye injuries due to a lack of PPE.
Workers’ compensation covers injuries or illnesses and ensures that employees don’t miss out on wages. If the injury or illness is caused by your business, you will likely be responsible for paying the damages. As such, you must take out an insurance package covering potential claims.
If you’re unsure of your legal obligations to employees, work with a professional HR consultant who can help you navigate state and federal employment law. This will give you peace of mind when onboarding new employees and will aid your efforts to create a healthy, supportive work environment.
Safeguarding Your Online Presence
If you’ve opened a digital storefront, you’ll need to make a few adjustments to your workplace policies and insurance. Running an e-commerce business exposes your small company to unique threats that are easily overlooked if you’re used to running a brick-and-mortar store. To secure your security considerations for e-commerce, introduce these cybersecurity policies:
- Implementing Secure Processing: e-commerce fraud is extremely common in digital marketplaces. Payment fraud, account takeovers, and refund fraud will derail your business’s profitability and undermine your efforts to process online transactions. Choosing a payment portal that meets the Payment Card Industry Data Security Standard protects your firm against fraud.
- Utilizing Two Factor Authentication (TFA): TFA strengthens your network by making it harder for malicious actors to gain access to sensitive data. Failing to protect data will result in a breach of GDPR and lead to hefty fines.
- Auditing Safety Measures: Work with cybersecurity specialists to ensure that your web presence is secure against emerging threats. Making vulnerability assessments will help you take a proactive approach to cybersecurity and minimize the risk of a breach.
These measures are designed to protect you against malicious actors and will improve the resilience of your brand. This is crucial, as recent estimates by IBM suggest that the average cost of a data breach exceeded $4.88 million in 2024. By taking proactive measures to ward off hackers and fraudsters, you can safeguard your online presence and protect your business’s long-term profitability.
Conclusion
Proactively addressing legal concerns should be your top priority as a small business owner. Failing to account for workers’ compensation or income loss due to an extreme weather event will derail your operations and undermine your profitability. You should also take proactive measures to protect your business’s online presence, as exposing consumer data will lead to hefty fines and damage your brand reputation.
Featured Photo by Bench Accounting on Unsplash
