There are so many benefits to owning your own business. On the other hand there are some major drawbacks as well. One major disadvantage to owning your own business, especially a small business is the risks involved. When it comes to the risks involved in owning your own business there are a few ways to deal with it. The first and worst method is to just accept all the risk and face the consequences when something happens. The second method is to approach risk and to eliminate and manage as much of it as you can. The third approach in handling the risk involved in business is to purchase an extensive and all encompassing insurance policy.
There are advantages and disadvantages with each approach. For instance in the first method where a business owner chooses to do nothing but accept all the risk and consequences involved the advantage is the initial savings in overhead spending. If you don’t do anything to manage or insure the risk it will cost you nothing, to begin with at least. The problem with this approach, especially in business is that you are risking your livelihood, the way you bring income in that supports the rest of the things in your life. Without the ability to make money you put yourself a t risk for bankruptcy and worse; a lifetime repaying a debt that could have been avoided.
The second method of dealing with the risks of owning your own business is with managing or eliminating the risks. This approach in handling business risk involved decreasing the risk associated with your business practices. Risk management in short involves a regular review of company procedures and making sure that policies are in place that reduce and eliminate the risk to your staff, customers and business in general. This could be something as simple as replacing the batteries in your fire detectors to something more complicated such as credit management and debt collection policies and procedures.
Handling risk in business with proper insurance coverage seems like a no brainer for some but others do not see the importance of paying extra premiums for special business policies. The fact is that most businesses operate with risk. Insuring your risk alleviates the burden of litigation and repayment from falling all on your shoulders. Insurance premiums for businesses vary from general liability to workers compensation to product liability. There are a wide range of insurance policies for businesses. Not every policy applies to every business and industry. It is important when seeking insurance coverage for your business to meet with an insurance company that provides comprehensive business insurance coverage for a variety of industries.
When it comes to approaching risk within business the best approach is most likely a combination of both risk management and insurance. When used in combination you can decrease the risks involved in your business and hopefully this will decrease the chances of needing expensive comprehensive insurance. A prime example of this in action is adding an alarm system to your business decreasing insurance premium costs while decreasing the chance of loss due to theft. Owning your own business is a balancing act and handling the risk involved in business is all about a well balanced approach of managing and insuring risk.