Business Planning – Indicative Insurance Costs
Published January 25, 2012 | 
Years ago, when you wanted to start a business it was normally a combination of savings (yours), loans (friends and family) and lastly bank finance that helped you to get going. We all know that whilst you might have the best business idea ever, you need some investment to get going. There are very few businesses that you can start, and earn a living from, without at least a few thousand pounds. Most businesses will need significantly more than this.
In 2010, things are slightly different when looking for your business start up funding. Sources of finance have changed and business owners do tend to look to the UK banks for seed finance to get going in the first instance. The worldwide recession has put a stop to the likes of RBS and Bank of Scotland throwing good money at bad businesses. Nowadays, you will need to put together an extremely robust business plan to even get an appointment with a bank employee to discuss a loan of any sort.
But what does the business plan do? In essence, it puts down your ideas and aspirations for your new venture into cold, hard numbers. What do you think you will bring in (turnover or fees) and what do you think you will pay out (business expenditure) and what will be left? That is all that it is about, however detailed the plan is, all it is really asking is will you make any money. Of course, many businesses plan to make a loss in the first few years as the costs of the initial investment take their toll. This is why most business plans are either three or five years.
As part of this planning process, you will usually receive a template either on-line or in the form of a paper copy to complete. The template will include a list of all the possible costs that your business could, and usually will, face. We can guarantee, for any new business start up, that there will be costs in the plan for things you have not only not thought of, but probably not heard of.
One of these costs that you will be aware of is your business insurance. Banks will not lend money unless they know that the assets that you will be buying, with their loan, are suitably insured.
You will be faced with a problem though because, you cannot simply look for a quote because the business does not exist. The bank may try to flog their own cover to you, but beware as this will be from an extremely limited market so they are not giving you a choice.
Does My Business Require Shop, Restaurant or Indemnity Insurance?
Published January 25, 2012 | The type of insurance policy you need will vary depending on the type of business you own and operate. You may choose to hire an insurance agent to help you sift through the colossal mound of details and technical wording to help select the most suitable kind of insurance to provide your business with adequate coverage. Be aware that depending on the method of compensation for such insurance agents, they may not be able to offer policies that are as competitively priced as if you go directly through the insurance carrier. However, employing the services of a dedicated insurance agent may save you a significant amount of time and a better understanding of the products available to you.
Both restaurant insurance and commercial shop insurance usually incorporate four main principle elements of cover. Buildings and contents insurance protect your business against such concerns including, but not limited to, loss from fire, flooding, storm damage, and damage from break-in including theft of money, stock, or equipment, or damages such as loss of freezer contents, or loss or damage to goods while in transit. Public liability coverage will protect you against claims made by a third party of personal injury or other damage while on your property, and likewise with employer’s liability insurance should an employee be injured while on your property. Lastly, business interruption coverage will often provide security against a number of variables such as loss of income due to fire or flood damage, loss of income due to electrical failure, blackout, or gas leak, denial of access, notifiable illness or death, vermin and pest control and so forth.
A more tricky policy to understand is that of professional indemnity insurance. At first glance, a professional indemnity insurance policy may appear to be a difficult concept to grasp, but once the principles of its purpose are identified, it becomes a lot simpler to understand. There are, however, a significantly large number of variations available within the bracket of professional indemnity insurance. Read the policy carefully to ensure you are aware of the limits of the coverage the policy offers you. Some indemnity insurance policies will also cover claims of libel or slander, but often this will require a different kind of professional indemnity insurance, one that will cover ‘any civil liability’ as well as a breach of contract.
How to Start Your Own Insurance Company
Published January 25, 2012 | Insurance agencies are normally started by insurance professionals and people with experience in financial services who want to spread their wings and become entrepreneurs. While it’s okay to get excited about starting your own insurance agency, try to stay rooted in reality. Operating an insurance business is challenging to say the very least. It takes a lot of hard work, resolve and determination to kick-start an insurance business and keep it running smoothly. If you’re thinking about how to start an insurance company, first talk to others already in the business to get an idea about the obstacles you’re likely to encounter.
Skills
The first step in deciding how to start an insurance company is assessing your own personal skills. Are you good at sales? If you’re already in insurance sales, are you reasonably successful? Do you have an interest in financial services? If you lack the go-getter attitude present in most successful insurance salespeople and have only a passing interest in finance, then perhaps this is not your cup of tea.
Insurance Products
The next thing on your agenda should be to decide the type of insurance to deal in. You can deal in life and health insurance, auto insurance, property insurance, liability insurance etc. Auto insurance is perhaps the easiest to sell but not as lucrative as life insurance. When determining how to start a life insurance company, you have to remember that your main source of income will be commission and residuals from the policies. The higher the policy amount, the greater the commission. You might want to keep this in mind while deciding what type of insurance to specialize in.
Get a License
While you’re planning how to start your insurance company, make sure that you study the licensing laws of the state that you live in and get licensed. For this, you’ll have to pass an examination. You need a separate license for each type of insurance product you plan to sell. Also, keep abreast with the latest tax laws and others related to financial products.
Financing
Draw up a business plan enumerating the capital you need to get started, monthly expenses, projected future commissions and profits. Finance is the lifeblood of any business. So ensure that you accumulate more that what is generally required. If your business runs into rough spots during the initial stages, lack of finance will cripple you. Common sources of finance are banks, financial institutions and investors from the industry. Some of the expenses you have to provide for include advertising, commissions, salaries, professional fees, rent, taxes, conveyance, office supplies etc.
The Relationship Between Insurance and Finance
Published January 25, 2012 | Insurance and finance are closely interwoven fields of business, not least because they both involve money. They also often both involve speculation and risk, and often where one goes, the other will follow. Take property investment for example, it involves a large amount of capital out lay, swiftly followed by insurance to protect the capital investment. It would be ridiculous to spend such a vast sum of money on a venture and not protect it against possible damage. It therefore makes sense to store information on these two subjects together, as the relationship is so logical.
Insurance is a form of risk management used to protect the insured against the risk of a loss. It is defined as the equitable transfer of the risk of a loss from one entity to another in exchange for a premium. There are different kinds of insurance for just about every conceivable event. The most common insurance is probably life insurance, which provides a monetary benefit to a decedent’s family or other designated beneficiary.
It can cover funeral or burial costs and can be paid out to the beneficiary in either a lump sum or as an annuity. Property insurance is one of the more necessary insurances as property is extremely expensive and if it is lost or damaged for some reason (fire, earthquake, flood) it can be very difficult to replace without adequate reimbursement. Travel insurance used to be seen as an unnecessary expense and is still viewed as such by many. Its importance is, however, being increasingly recognised by the public at large. It is cover taken by those who travel abroad and covers certain unforeseen events such as medical expenses, loss of personal belongings, travel delays etc. There are numerous other types of insurance, too many to mention, all vital if you want to protect something of particular importance to you or another.
In the world of finance there are many sub-categories, also too numerous to mention but a few will be included here. Forex, or the foreign exchange market wherever one currency is traded for another. It includes trading between banks, speculators, institutions, corporations, governments, and other financial markets. The average daily trade in the global forex is over US$ 3 trillion.
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