California Small Business Blog

Home Based Businesses and Insurance

On Google, someone asked in one of the groups if he needed insurance for his home-based computer consulting business. His thought was that he would not have clients come to him, but rather he would go to them. Therefore, he thought insurance was not necessary.

A computer consultant definitely needs insurance. Here are a couple of examples where insurance would be helpful:

• You go to a customer's house to fix their computer and you drop their LCD monitor. Of course, you drop it on their wood floor and the floor is damaged as well. If you have a commercial general liability insurance policy, they will pay for all of the damage.
• You go to a customer's house to fix their computer and you erase all of the data. There is no back up. And the data is not just pictures of the kids, but the homeowners own home based business data. Now they have to pay someone to recreate the data. Again, insurance would cover this.

Okay, so you do not have a home based computer consulting business. Would insurance still benefit you? Yes.

• You own a home based business selling items on Ebay. You sell "It" (which is what it looks like Ebay wants to sell these days, based on their ad). "It" arrives at the customers house and "it" is broken. The customer opens the package and cuts a finger - badly. An insurance policy would cover you if you are asked to pay the medical bills or sued.
• You own a home based marketing business. A CPA hires you to do a mailing. You make a mistake on the mailing and the CPA is sued for violating his ethical obligations. The CPA turns around and sues you. Your insurance policy would defend you.

My point: An insurance policy is necessary for most small businesses. You should consider getting one - especially for the low cost.

A Great Survey

I came across this website with a great survey. Now, the website is for attorneys, and the survey is for attorneys, but if you change the words "your firm" or "your practice" to "your small business" it works just the same. Give it a try. It opened my eyes to things about my business that I want to change. Maybe it will do the same for you.

Is Auto Insurance Required for Your Small Business?

The easy answer is no. You are not required to carry insurance to own a small business. It is recommended, but not required. (There are some exceptions for businesses that must carry insurance, but if you are in one of those businesses, you know it.)

Of course, there are no hard and fast rules. If your business owns a car, you need to have auto insurance. If your employees are going to drive for you, you SHOULD have auto insurance. If you drive your own car for business, you SHOULD have auto insurance.

Why? The first one is easiest. If the business owns a vehicle, you must insure it because California law requires the owner of a car to insure the car. So, you must insure it. If your employees are going to drive for you, you do not need insurance, but if they drive their car, and they are not adequately insured, the person they hit may sue you. If you drive your own car, and it is insured, you should have auto insurance because your personal policy may not cover you for damage that occurs when you are in an accident while working.

Insurance is one area where you may want to hire someone to help you figure out what insurance is required, what you should have, and what you do not need.

Uninsured Motorist Coverage for the Small Business

I am on my insurance soap-box again. I do not know why, but it probably has to do with some of my clients getting a raw deal.

This one is simple. As a small business owner, or any business for that matter, you may have an auto insurance policy. For your policy, you have liability coverage. But, do you have uninsured motorist coverage? And, if not, should you?

Uninsured motorist coverage pays for your employees injuries if he/she is injured as a result of an accident that was caused by an uninsured motorist. (If the motorist is underinsured, your insurance would also pay.) But, a lot of businesses do not carry it. After all, it does not protect your assets. So, why should you pay the extra premium for it?

First, it is a cheap benefit for your employees. Uninsured motorist coverage is inexpensive. By providing it, if your employee is injured in a motor vehicle accident with an uninsured or underinsured driver, he/she will be compensated. They may have workers comp coverage, but the uninsured/underinsured motorist coverage may provide more benefits.

Second, what if it is you in the accident? Now you are limiting your, or your partner's, or your key employee's, rights. Do you really want to do this?

Uninsured motorist coverage is an inexpensive way to protect you and your employees. At your renewal, ask your agent about it.

Med Pay Insurance for the Small Business

This happened to me again today, and I do not know why. (Okay, I do know why, so I will explain it here too.)

When you own a small business, you generally buy a commercial general liability policy. This policy covers you if someone is injured as a result of your negligence. In other words, if you do something wrong, and someone is hurt, this policy will pay for the other person's damages. If you are sued, this policy pays for the cost of defending you, as well.

But, what happens if someone is hurt and it may not be your fault? I know someone who was hurt at a business. It may not have been the businesses fault. The business, however, does not have med pay, or medical payments, coverage. Most small businesses do not. So, you ask.

Med pay pays someone else's reasonable and necessary medical bills if they are hurt on your property - even if it is not your fault. So, hypothetically, someone is on your property and drops a box on their foot. It is not your fault. However, if they break their foot, your insurance company, if you have med pay, would pay their medical bills. Why does this matter?

If you are a small business, you may like this customer. This may even be one of your bigger customers. If you do not have med pay, this customer may sue you for his/her medical bills. Or this customer may have to pay out of pocket for their expenses. If you had med pay, your insurance company would pay the bills - and you would have a happy, or happier, customer.

All small businesses should look at adding med pay to their policy.

Marketing by Being First

I admit that this idea is not new. But, DuctTapeMarketing reminds us that the media loves firsts.

Okay, so in 2005, its pretty difficult to be the first to do something. You won't be the first with your business. But maybe you are a realtor and team up with an insurance agent to offer some product or discount to your client? Maybe you are a doctor and you are teaming up with a chiropractor in the same office to offer help to your patients?

The point is that you may not be the first doctor, but you can be first at something. And if you are first, the media will cover your event. That will get you free publicity - which, in my opinion, is the best kind.

Why Should You Take Care of Your Customers

Okay, the obvious answer is that they are a source of referrals. But, there are other reasons that it is important for you to take care of your customers.

• It costs five times as much to get a new customer than to keep a current customer.
• Customers will spend more money for the same product if they get better service.
• 98% of customer interactions go more quickly if you have rapport with your customer.
• Upset customers will tell 10 to 20 people that they are upset.
• Happy customers will share their experience with 9 to 12 people.

Those five facts should give you reason enough to take care of your customers. Let me put this into a dollars and sense approach for you:

• You save money by keeping current customers happy
• Customers will pay you a higher hourly rate if they are happy
• Quicker transactions means you can get on to other customers
• Keeping customers happy limits the bad PR your firm may get
• Happy customers will refer you new customers

You should take care of your customers because it is the right thing to do. However, beyond that, it will save you expenses and increase your revenue. Even if you are a bottom line type of person, then you should realize the benefits to keeping customers happy.

4 Ways to Re-Energize Your Sales Force

For most of you, selling is the key to your business. And I want your business to succeed. So, here are 4 ways to increase your sales force's drive:

• Hire differently. Assessment tests may help you figure out which type of person to hire. Give them a shot!
• Remember that every employee sells! Customers are willing to pay more to buy the same product if they are treated well. Make sure everyone on your team is aware of this. And compensate them accordingly.
• Do not forget your base. Your base customers got you to where you are today. Do not lose them!
• Prospect for customers online. There is a huge potential in the internet for getting new customers. Use that to help your sales force get new leads.

Your sales force is critical. If they are not selling, no one else is doing anything. With these four steps, you may be able to help your sales force reach their potential.

Skype for Phone Service?

This is an interesting way to keep your phone costs down: use Skype. Skype is an internet based phone service that lets you make free calls from one PC to another. Sounds great!

But, as with everything, you have to be cautious. BusinessWeek is reporting that Skype may make your system more vulnerable to attack by hackers. Apparently, Skype opens up a hole in your computer that may allow hackers in. Some IT folks are concerned, and some are not.

If you are a small business, saving money is important. Skype may provide that opportunity to you, but you should check with an IT expert on the security risks first.

5 Tips to Start Your Own Business After Leaving A Job

When you find yourself unemployed, be it because you quit, were fired, or were laid-off, its not easy. I started my own practice after leaving my last place of employment. I once heard that it is easier to find another job when you are employed. My guess is that starting a business is easier when you are employed as well. But, if you find yourself unemployed, here are 5 tips to start your own business, courtesy of About.com:

• Take your time. If you find out you are going to be unemployed, it is okay to take some time before you start your new job. (Of course, I started my own firm about 2 hours later, but I had been planning it in my head since my first week of law school!)
• Assess your skills and experience. If you want to stay in the same line of work, you will be up and running quicker. If you want to venture off into something new, and there is nothing wrong with that, then, as Nike would say, "Just Do It," but understand there will be a longer start up time.
• Evaluate your Industry. You need to know as much as you can before you get started.
• Check the Bank Account. Make sure you have enough money to last 6 to 12 months. You never know how long it will take, but you need to be able to keep the lights on in your house!
• Develope A Timeline. It does not take long to set a realistic timeline and figure out when things should be accomplished. It will make you sleep easier at night.

You can start a business when you are unemployed. These five steps are the first things you should do before you decide to go forward. Then go out there and succeed!