Small Business Insurance: Protecting Against Risk
Running your own small business is risky at best. At any moment, the economy could tank, as it did in recent years. In addition, competition can come out of nowhere with new products or services or new ways of serving your markets. There are also natural disasters that can and do occur that will require you to actually shut down your business for days and even weeks.
While you can't make risk go away, there are smart things that you can do to minimize the impact on your business. Buying insurance is only one of them. For a more comprehensive risk management strategy, we recommend four things:
With regard to being strategic, we recommend looking ahead and remaining aware of what is happening in your local market area, your state, nationally and even internationally. Are there things shaping up that can negatively impact your business and, if so, what can you do to compensate?
Over the past three years large firms have pulled back, minimized new investments, and waited out the economic slump. Interestingly enough though, playing it safe is not necessarily the right choice.
In the late 1920s, two companies, Kellogg and Post, dominated the relatively new market for packaged cereal (Surowiecki, 2009). When the depression hit, Post did the predictable. It cut back on expenses and, more specifically, on advertising. Kellogg, on the other hand, doubled its advertising and heavily pushed its new cereal, Rice Krispies. By 1933, even as the economy tanked, Kellogg profits had risen almost 30% and it had become what it remains today, a dominant player in the industry.
We are certainly not advocating that small businesses start splurging on advertising, but we are suggesting that this is a good time to really look hard at your markets and determine what you may be able to do that is innovative, special and puts you ahead of the competition.
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