Insurance = Business – Risk = Profit
For a new beginner in any business or profession, the trends of the market are not any less important than the academic qualifications he got. Many educated businessmen or professionals are seen going down just because they failed to notice some special trend in their industry. Industries are changing and one can’t be completely updated with every change that is happening. Here, I’m talking mainly about the risks that come along with your scope of profit when you are about to start something new. The phrase ‘no risk no gain’ is not just a popular saying. It is a completely technical fact. So, you may equally be going for a huge loss when you are seeking a profit for your effort and investment. There are many unexpected ways in which your business can go horribly wrong.
So, why not be safe! Insurance business, today provide a wide range of coverage for many such contingencies that can even financially embarrass you, if overlooked. Don’t worry! Insurance industries can be your guardian if you can use them nicely. Insurance companies ensure a number of ingredients of your business that may induce a loss to your business.
Just have a look upon the following list of insurance you can get to make your business sounder and risk-proof:
- Stock insurance: Your inventory is the main ingredient of your business whether you trade in goods or produce your own goods. Left unconsidered, even petty thefts from your huge stock may impact seriously upon your profitability. And your stock is the one thing that can destroy you in most ways. Fragile to fire, water, and even theft, your stock can bring you a loss while in transportation, storage, production, or virtually any stage. You can ensure your stock against any such probable losses. You don’t have to go through every one of these risks and cover yourself against each of them. You just have to find out, which one of these risks are you most exposed to. For example, if you trade in goods internationally through sea routes, marine insurance is your thing. In potentially inflammable circumstances, the stock should not be stored without purchasing fire insurance.
- Keyman insurance: If you are in the business of providing any service, then the most necessary ingredients in your business are probably your employees. A restaurant business can immediately go down if something happens to the cook. So, in keyman insurance, such risks are accounted for, and coverage is available against death or separation of such key employee. But you should purchase this coverage only if your business is heavily dependent upon some key employees of yours.
- Insurance for fixed assets: If some unwanted event like fire or flood occurs, not only is your stock at risk, but also your fixed assets liable to bring you loss. The plant and machinery you are using or even the building of your business may bear some damage, which will ultimately cost you dearly. Such important (or even unimportant) assets can also be insured against any contingent losses. But ensuring each and every fixed asset would not be profitable. So, you will have to analyze, among others which of your assets are more prone to damage and which among them are more likely to cause you more severe loss.
- Insurance against the loss of profit: So, let’s say your inventory, fixed assets, and even your key employees are either safe or sufficiently insured, and a fire broke out in your factory. Would you be okay with it? Of course not, right? There still remains the fact that your business would be disturbed for a while until the repairing is finished. That means you aren’t going to get your normal profit, that you would have got if there hadn’t been any fire in the first place. So, there is this insurance policy, where you can cover yourself against such cases of disruption in your business. Basically, an estimated profit margin is computed depending upon previous year’s normal rate of return and adjusting it for any expected changes in this year. Such a profit, that you couldn’t make due to say the fire will be your claim if you are fully insured. Otherwise, an average clause is used to make it proportionate to the percentage of insured amount out of insurable amount. If an insured amount is equal to the insurable amount, it is said to be fully insured.
If still there remains any risk, you can think of, that I forgot to speak about, just go to the nearest insurance agent with your concerns. I’m sure he will surely have something for you too. Insurance is a risk management technique. And when you are able to manage the risks in your business, the only thing remaining would be profit.
