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Business Insurance is Not a Luxury for Small Business Owners

You are a strong woman. You are a smart woman. You own your own business because you have a passion for what you do and know in your heart you are the best person to do it, whatever that passion is—business consulting, personal coaching, catering, direct sales, real estate, insurance. Your business is your child, and you give it your all.

You are a planner. You wrote the business plan. You created a marketing plan. (Ouch—expensive, but you have to invest in your own business, right?). You have the logo, the business cards, the stationery, the client management and accounting software. You may have hired your first employees. You’re cutting it a little close to the bone with cash-flow—you might even be digging into retirement funds or carrying more debt than you like on your credit cards, but that’s okay. Because the clients are coming in, more slowly than you want, of course, but they are coming in. Your child is growing. You’re in control of your own destiny. This is why you started your business in the first place.

You’d do anything for your business. You turned your dining room or basement into an office. You work evenings and weekends. Along with your family, your business is your life. So naturally, you want it to grow big and strong, and you want to protect it. It’s one of your children now, remember? So your business is fully insured, right? Right?

If you are like many of the small business owners I talk to, the answer is way too often, “I didn’t think I needed insurance.” Or “I’m too small for insurance.” Or “Insurance—I can’t afford to pay for that right now.”

But small business owners can’t afford not to pay for insurance right now. It should be part of the business plan from the start. It amazes me that so many creative, smart, driven owners who plan their business down to the number of paper clips don’t think they need business insurance.

A personal story.

By nature I am a planner, too. I always had a map of where I was going and how I was going to get there. With a great plan, everything works out as we envision it, right? Isn’t that why we plan in the first place? But life is full of the unexpected. Life throws you off your plan.

At thirty-six, I was married to a chief petty officer (hospital corpsman) in the Navy and we had two wonderful children. I was a nationally recognized day care center director. My husband was near the end of a 20-year career in the U.S. Navy. We traveled with the Navy and had lived in many parts of the United States and Japan. The kids met exciting new people. It was a life of adventure, but we were all looking forward to the next phase of our lives, excited by the possibilities of reinvention.

Then on April 7, 2001, it all changed in an instant. My loving, dedicated, courageous husband was killed on duty in a helicopter accident. My life and the lives of our children were turned upside down. We were devastated with shock and pain and grief. This was not part of the plan.

After the initial shock, we picked ourselves up and got through it one day at a time. Luckily, about two years before this tragedy, a parent at my day care who was a life insurance agent had given a presentation about the importance of family insurance. His advice had encouraged me to do an insurance makeover and to this day I am grateful I did. One thing my children and I didn’t have to worry about in the midst of our pain and grief was how to pay the bills.

The lesson for me was this—though I couldn’t control what happened in my life (a hard, painful lesson I feel to this day) and the lives of my family, I could make plans that left us less vulnerable in worst-case scenarios.

As a result of this life-changing experience, I felt very strongly that I wanted to protect others in the same way I had been protected. I became an insurance agent. Not super exciting, I know, but I get fulfillment from protecting clients from risks—risks ranging from those of everyday living to the catastrophic events we don’t want to think about. We are all at personal risk for financial losses of property, liability, and even life. If you are a business owner, you are doubly at risk, since your family’s well-being is not only tied to you personally but to your business as well. Don’t be short-sighted.

Many at-home businesses believe they have coverage under their personal home policy, for example. This can be a costly misconception. Business operations are generally excluded from home policies and must be covered with an endorsement to the current policy or, depending on the nature of the business, with a separate policy altogether. A home policy also has very limited coverage or none at all for business property or inventory. As the business changes and grows, owners need to routinely review their exposure to protect the business from financial devastation due to theft, fire, or liability claims.

Similarly, personal insurance may not provide enough coverage in the event the business owner becomes ill, disabled, or otherwise unable to perform the functions of the business. Review of health and life policies is very important to protect not only the owner’s family but their revenue and income as well. In other words, will the business be able to run seamlessly without the owner? Is there a financial succession plan? Is there an insurance plan to fill in the gaps before the business can be sold or get up and running again? No one wants to think about their own mortal limitations, but it is too important not to. What legacy do you want for your business? Prosperity or failure?

Business owners can’t afford to put off this kind of risk analysis any longer. Such an analysis can be simple or in depth, and your trusted agent will be happy to offer this service. If you haven’t done so, I encourage you to do this now. It will take some time from a busy schedule and may cost you a bit in further expenses, but planning for the unexpected could save you years of grief and financial insecurity—and save your business for the next generation.

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