Photo: Owen Brown
Small and/or family businesses have to take on a higher level of caution. As we will see, such a business can be a bit more fragile than a large business. In the discussion of business interruption insurance, there may be increased need due to the risk.
“Fragile?”
It’s not an insult to the well-run small and/or family businesses that are out there. It’s more of a matter of unexpected scenarios that can drastically impact – and do so to a further extent – a business that is small rather than large.
Let’s look at a sibling policy to business interruption insurance: total permanent disability insurance. If a wife and husband were running a business together, and one of them were to become disabled and could not work again, you could only imagine the devastating quality that this could have on the business. There may not be the resources (especially with regard to expertise) to replace one of them.
This is the same case, but in a different way, with business interruption insurance. As a number of small and/or family businesses rely on key people, have tighter budgets, and other elements that come into play, it can be a more fragile situation – which opens the doors to tough times in unexpected events.
Business and Personal/Family Finances
It’s one thing for a small business owner to have difficulties in the workplace. However, many such owners rely on this income and profit to pay the bills at home as well as at work.
It is in this crossing where the harsh scenarios can take their toll on a business and family. If a family-run business were to get wiped clean due to a storm, there could be double the impact, so to speak, for the business and the family.
Indeed, the family may work together to keep the business alive. This means that the income will support the growth of the business and the family finances. If an event would make the business no more for a month (or longer), that could have serious consequences while construction is taking place (property insurance would cover that, of course).
In the meantime, thousands of dollars would be lost, as well as expenses that are in place. The financial strain could be so great that a family would have to become extremely creative to make it through the situation. That often translates into some uncomfortable choices.
Overview
For small/family business owners, what would happen to you and your business if it was gone for a month? Could you handle doing without the income for a month or longer? Would it affect your personal/family finances?
Take an in-depth look at how these scenarios could alter the landscape of your business. Truly these unexpected events could devastate some of the best businesses, as the combination of lost income and present expenses could be too great to bear. You might want to talk to a financial advisor to see how this could work in your coverage set. Perhaps it’s time to look at potential policies for your business if you haven’t already done so.
Related posts: