Yet professional indemnity cover is easy to check off the list (certainly when compared to some of the other decisions needed when starting or running a business), provides certainty and back-up against poor advice, failed sales, loss of raw materials, premises or business assets, and in any case is a necessary business expense, no different to legal or accounting advice. (And you can take out insurance cover against poor professional advice).
Should disaster happen, being insured can mean the difference between having sufficient cash flow to survive, and going under. Disasters need not be severe or catastrophic: non-delivery of product or raw materials, or the collapse of a subcontractor’s business, can have severe knock-on effects.
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Dynamic Small Business Magazine cited the Australian Bureau of Statistics on the reasons behind the failures of small businesses, noting that poor financial management and insufficient cash flow both played their parts in many such collapses. Adequate insurance can mitigate both. And UK online magazine Simply Business makes the point that underinsurance can cripple repairs or rebuilding, and that in some cases businesses are legally required to have insurance, such as workers’ compensation insurance and compulsory third party insurance here in Australia.
When starting your own business, ensure you add insurance to your checklist and your accounting spreadsheets: it’s a necessary cost of doing business.
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