According to the U.S. Bureau of Labor Statistics (BLS), 45% of startups fail within the first five years of operation. Although many factors contribute to this, cash flow issues are among the leading causes. An article published by Small Business Trends indicates that most startups operate at a loss, with only 30% breaking even. Business insurance for startups helps in keeping your business running amidst failures. Read on to learn why your startup should have business insurance.
Protect Your Business Property
It’s not about what equipment you have but what you do with it. Your business property, including tools and equipment, will always face the risk of loss and damage, with many expenses going into repairs and industrial machinery maintenance. Arguably, the best way to keep your startup running is to have startup insurance to cover your property. This will ensure you receive compensation for vandalized, stolen, and broken property. Additionally, business insurance covers repair and maintenance costs for damaged property. This way, your property will stay in good condition and save you unnecessary expenses that may cause losses.
Avoid Business-Related Lawsuits
One inevitable thing about establishing a startup is the payment of legal fees. You will be required to pay legal fees before renting a commercial space for your startup. Moreover, your business may be involved in legal issues associated with injuries, negligence, and premises matters. Other causes of legal issues include, among others, lack of proper licenses, failure to comply with tax laws, violation of employee rights, contract violations, and improper business structure. Fortunately, general liability insurance can help protect your business from possible lawsuits.
Protect Your Employees
As reported by the International Labor Organization, nearly 2.3 million people die every year due to work-related illnesses and accidents. The bad news is that accidents are inevitable. To be on the safe side, you should obtain startup insurance covering your employees in such adversities. It is also good to have your sick employees covered by health insurance to minimize or eliminate treatment costs. In one way, this motivates employees to work confidently, knowing they will be catered for in case of an injury or work-related illness. Moreover, insured employees tend to be more productive at work because they are happy and healthy. This is according to an article published by Forbes Media.
Protect Your Product/Service Offerings
Selling your products and services to customers does not mean they will work as expected. This is especially common in the medical field, where medical devices and drugs are recalled due to possible risks to patients. As per the Food and Drug Administration (FDA), about 4,500 medical devices and drugs are recalled every year. To give you an idea, in the first half of 2020 alone, there have been over 20 medical device recalls. Your business faces a risk of losses and even closure if your products and services harm consumers. For instance, a person involved in an accident due to failed brakes may sue an automotive manufacturer for damages. Therefore, you should protect your products and services to avoid dealing with such issues directly.
When starting a business, ensure you purchase business insurance for startups to protect your business against business-related risks. Do you have more questions about your business insurance coverage? If so, then contact the experts at Patterson & Associates in Richardson, Texas. We are ready to assist you with all your commercial insurance needs today.