Securing a Small Business Insurance

Inadequate funding is one of the main reasons 80% of businesses fail in the first year and a half. As a business owner, not only do you have to cover all operating expenses, but the time and effort required to succeed means that you will almost certainly have to say goodbye to your day job and regular paychecks. Unless you’ve saved enough to pay for everything at most 18 months, you will probably have to look for other funding sources.

However, here we encounter another problem. A recent survey cited by Credit Union Times found that only about one-fifth of small business owners — by the way, roughly the same rate as successful businesses — rely on a small business insurance. The survey showed that 62% were afraid to borrow and almost a quarter of respondents believed that not a single insurance would be approved. a A Harvard Business School working paper by Karen Mills (Director of the US Small Business Administration until 2013) shows frustrating statistics. Banks continue to implement measures restricting lending to small businesses since the outbreak of the financial crisis, because such insurances are always riskier than those granted to large companies. Small business insurances of $1 million or less have fallen 21% since 2008. These insurances made up half of all bank insurances in 1995, but only 30% in 2012.

So what can you do to have a better chance of getting a insurance?

As the saying goes: “The devil is in the details.” Given the more stringent requirements of the banks, you will need to come up with a very convincing plan that shows that your business will really turn a profit. Each number presented should be supported by conclusive evidence or at least some factual projection backed by in-depth research. There should also be a clear plan about where the money will go and how it will affect the success of your business.

Aside from this, your personal finances will also be fully checked, so make sure your taxes, mortgages, credit cards, assets and liabilities, and even your credentials are all clean and tidy.

The bottom line is, if you believe in your business idea and have done your due diligence to come up with a sound budget and business plan, there should be no reason for you to refuse to take out a small business insurance. Otherwise, you may want to reconsider quitting your day job.