Business Owners Insurance Protects Businesses From Unexpected Risks

Various businesses during their course of daily operations may face unexpected risks that affect efficient functioning and profitability of businesses. Business owners insurance indemnifies the owner of businesses from various risks to which the business are exposed and from business related liability exposures. It is in best interest of owners of companies to have this insurance as any damage or compensation claim can have a significant impact on the business.

It Protects:
The business owners insurance provides necessary protection against workplace theft, damage, accidents, and injury and third party compensation litigations.

Damage or Destruction of Business Material
Business owners insurance provides protection to owners of businesses in case of damage or destruction of business material, office equipments, inventory, vehicles etc during the course of operations. Even the loss of material, furniture, machinery and other structure due to fire is covered under this insurance. This insurance entitles the owners of business to receive an amount to compensate the cost of damage. This insurance also provides coverage to damage or destruction of cargo during transit or storage. Also, it provides coverage to loss or damage to business property or material due to employee theft, fraud, dishonesty, or any criminal act done by employee.

Loss of Income
Uneventful problems, damage, or fire may occur that can ruin the businesses and leaves them incapable to operate efficiently. The businesses as a result suffer from loss of profit and inability to make payments for expenses like taxes or debt payments that needs to be made even when the business is not operating. The business owners insurance provides protection against loss of income incurred due to closure of businesses due to fire, explosion, or similar incident that leaves business premises and vital business equipments unusable.

It enables the owners to cover the losses due to stoppage of business operations. Coverage is also provided for losses incurred by owners due to mechanical breakdowns or other machinery crucial for efficient running of businesses. This insurance helps owners to take care of expenses that the business would have earned in normal working conditions.

Theft or Loss of Tools or Equipment
A lot of machines, equipments, and tools are used and required for efficient running of business operations. These machines, equipments, and tools are sophisticated, expensive, and needs to be handled with care. Any damage or theft of these equipments or tools can significantly harm the productivity, efficiency, and profitability of businesses. Business owners insurance provides coverage to any form of damage or loss to tools or equipments due to theft, burglary, or robbery during the course of operations.

Crime Coverage
Business owners insurance provides coverage against loss or damage to business property, tools, equipments, and machinery due to crimes such as theft and damage due to employee dishonesty, embezzlement, and frauds. Web-based businesses are provided coverage for losses due to cyber crimes done by computer hackers and viruses.

Business owners insurance also provides for liability coverage arising due to bodily injury to workers, employees during the course of employment. Third party compensation litigations due to property damage, advertising injury, and personal injury due to slander, libel, invasion of privacy, and copyright infringement are also covered. This insurance covers all the legal costs that are incurred to defend the cases and the compensation amount, in case the business is sued.

Financing Your Business

Now that you have decided on what sort of business that you want, it is time for one of the most painful parts of buying into a business – yes, the financial side.

Money is the root of all evil is a phrase that’s been bandied around quite a bit, and with the economic climate still in a rather delicate position, buying a business is not as simple as it sounds.

The ideal scenario is that you already have sufficient funds at your disposal. For instance, you may have been made redundant from your old job and you may have received a hefty redundancy package – or at least one that’s enough to help you buy a business. The other alternative is that you have enough funds in the bank anyway. Whether you were working in a high-paid job and chose to form your own business; whether you received inheritance money; or whether, in a vast miracle, you won the lottery, you may have enough money to buy your chosen business outright.

The more likely scenario is that you will have to borrow money, and again, the economic climate means that banks or businesses aren’t quite as willing to pay out as before. That means that you have to put your case to them, and also make that case as convincing as possible.

The two alternatives are both vendor financing and bank loans. Vendor financing takes place when a person or persons selling their business are wiling to lend the buyer part of the money needed. If you do not have the right amount of money, it may be possible to ask the vendor if they are willing to take whatever money you can afford, and then pay the rest back in installments.

It’s a good idea in principle, but be aware of a few things. For one thing, the vendor may wish to charge you interest, and may also want to use whatever assets you have as security, for example your home or any other property that you may own. If for whatever reason you cannot pay back the outstanding sum or if the business goes bust, be aware that you may have to pay the forfeit with your property – so make sure that vendor financing is a suitable option and that you know the risks.

But then the same could be said of a bank loan, which normally involves a bigger sum of money to be borrowed. And the vendor will certainly be happy when the sale goes through, since it will take a shorter period of time.

If you do choose a loan, one element that may be on your side is that your chosen business may be well-known. It’s also possible that you may have decided to buy into a franchise. Banks regard franchising as a safer bet, since the majority of franchises actually work out, and also most franchises tend to be high profile names. But equally, buying your own business may impress the banks if there is proof that that business has a solid track record and a history of making good money.

One of the best methods to prove your case is of course, producing a business plan. Providing that potential candidates come up with a good, well worked out plan, the chances are that they’ll succeed in paying back the money.

The advantages of producing a good plan will allow you to have a clearer understanding of what is required (a benefit in itself), and will prove to the bank or the vendor that you have a clear vision in your head of where the business will be heading. The plan needs to demonstrate that you have a solid grasp of the business opportunity and its projected financial forecasts. Of course, a bank or vendor is only going to respond to the people that can actually pay the money back.

Unfortunately, it’s rare that banks lend you all of the money, and with escalating costs, you are going to need to stump up some of that money yourself – call it the equivalent of a mortgage deposit. You will also need to bear in mind that you need liquid capital to support yourself during the first few days of your business. So work out the costs, calculate a worst-case scenario, and that way, you won’t be unpleasantly surprised.

When looking for potential businesses though, don’t just settle on the cheapest option. While there are plenty of affordable businesses out there at good value prices, you still need to make sure that you are compatible with the business and that the business is compatible with you in terms of interests, knowledge and skill. Don’t just settle on the first cheap business that comes along – make sure it’s the one for you.

If you want to choose a bank loan, a good idea is to shop around – talk to different banks to make sure that they know what they’re talking about and that they have the right amount of knowledge to support your aims and ideas. The ones who understand your own particular business needs will be worth considering. It’s also worth checking out which ones offer the best deals and support. Either pay a visit to your shortlist of banks in person (which will allow you to make that initial contact) or trawl the web for any potential lenders. Understand the different incentives and offers, such as free transactional banking terms, payment holidays as well as the charges that the banks may put on you for security costs and valuation fees. It’s also worth familiarising yourself with all the business jargon, legal terms and small print that may prove to be a problem.

In short, the key is research. Do research on the affordable businesses that hold potential for you. Research the banks that offer the best deals. And prove that you have the research skills by producing a sound business plan. That’s the key – now unlock.

Unsecured Business Financing – Building Corporate Credit Basics

Building business credit in order to avail from attractive business financing deals is quite challenging, yet very beneficial. Lack of liquidity is one of the most acute concerns of business owners, as business financing allows businesses to grow faster and save money using the economies of scale. As most business owners and corporate officers do not want to risk their personal credit, they seek corporate credit solutions to satisfy the growing cash inflow needs of their business. The problem is that among thousands of lenders that offer business loans there are barely few hundred that report to business credit-reporting agencies, making it difficult to build corporate credit. Therefore, a profound research of financing options and a thoughtful selection of business lenders is needed to build business credit fast and trouble-free.

Most start-up owners and managers have to make personal guarantees on loans for their newly formed entities. For some, it is additional and unneeded risk, for others it is inability to attract financing due to insufficient personal credit scores. That is why many business owners fall victims of lenders specializing in cash advances and bad credit loans, having to overpay huge amounts in interest charges and fees. An established corporate credit always eliminates the hassle of providing personal guarantees and using personal credit to secure business financing.

Business Loans Have Numerous Advantages

Business loans very often feature advantageous terms over personal loans, making them a money-saving tool enabling business to attribute larger cash flows towards development and dividends to owners. In addition to earlier-mentioned benefits, such as no need to use personal guarantees and low cost of financing, there are some other advantages. Interest on business loans is tax-deductible, allowing more efficient tax management. In addition, unlike personal loans, there is barely a limit on how many loans a business may take out. That is exactly why all the effort and cost of establishing corporate credit always pays off at the end of the day.

Building Corporate Credit Is Not All That Difficult

While building corporate credit is not as hard as most people think, it requires thoughtful planning and sufficient time. Many business owners make a mistake of trying to get ahead of the game and applying for business loans while having no established corporate record on file with credit-reporting agencies. Therefore, the first step to establishing corporate credit is to set up manually a business profile with major business credit reporting companies. Having your company listed with D&B, Experian, and Equifax is necessary before attempting to apply for business loans.

Patience And Thoughtful Approach Are The Keys For Solid Corporate Credit

Your next step should be trying to establish credit accounts with modest credit limits with vendors that report to above agencies. Another mistake many people make is applying for large loans they would not be able to get and ruining their newly created credit record with unnecessary inquiries. Therefore, always apply for small loans with lenders that have the highest approval rates. Once a couple of credit accounts are created and are reporting to business credit reporting agencies, it is important to establish a positive repayment track and age them to raise your corporate credit score. Once again, there is no need to hurry.

Getting a corporate credit card is the next important step in your corporate credit-building process. Unsecured credit accounts that are paid on time have the most positive impact on your company credit profile and your business credit score. Having a history of timely payments on a corporate Visa or a MasterCard would prepare your business for the next level of financing. It is a good idea to check your Paydex Score and D&B risk profile before applying for larger loans. Once your Paydex Score crosses the 75 mark, you should be in good shape to seek unsecured business lines of credit with limits of up to $50,000 or even more. From this moment on, your only responsibility is to assure timely payments on your business loans, as getting more corporate credit should no longer be a problem.