Member Article

Insurance Warning As Tees Valley Business Start-Ups Grow

With the latest figures showing that business start-ups are growing in Tees Valley, Henderson Insurance Brokers has drawn up a business life-cycle checklist to help people with an entrepreneurial spirit keep on the right track.

According the latest economic review by Tees Valley Unlimited, the Local Enterprise Partnership for Tees Valley, the number of business start-ups was up by a third in 2013 to 2,620 taking the number of active enterprises in the area to 16,785.

For many people the first step on the self-employment ladder involves them working from home.

Emma Simkins, a Director of Henderson Insurance Brokers Teesside, warns that a common pitfall is assuming that if a business is based in a house that the property’s domestic insurance cover is all that is necessary.

She also advises that it is important that small business owners regularly review their strategies and policies as their operations change or expand.

Emma Simkins said: “Many successful companies have grown from small beginnings such as the social media giant Facebook that was launched by Mark Zuckerberg and some of his friends from a dormitory bedroom at Harvard.

“The latest Tees Valley economic statistics show that more people are becoming their own boss and many of these will work from home until their business becomes established.

“It is important that entrepreneurs ensure they have all the relevant protections in place because the last thing they would want to do is risk all their hard work by leaving themselves open to potential risks.”

According to Emma Simkins, the seven ages of business insurance comprise;

1. Starting out at home

At the outset many people cannot afford to rent or buy business premises so look at using spare space in their home such as a back bedroom.

]If you intend to start a business in your home, you should let your current insurers know the details otherwise you run the risk of invalidating that insurance.

A standard home contents policy may not be sufficient as this usually only covers what are termed as administration duties.

If there is more to your business than this and, in particular, if you have substantial amount of business equipment it would be advisable add an ‘all risks policy’.

In addition, if the type of firm you are running involves business contacts visiting your home, you should consider taking out Public Liability Insurance. While not compulsory, this would protect you if a visitor made a claim for compensation against you after suffering a loss or injury as a result of your business activities.

2. Going for growth and moving to rented commercial premises

Here you need to check what will be taken care of by your landlord and what you are responsible for.

Usually the landlord will insure the building. However, any enhancements made to the basic unit by a tenant would need to be insured by the tenant as tenant improvements.

You will need to take out contents insurance. When doing this you should consider if there are times of the year, such as at Christmas, when you hold extra stock and if so make sure that the value of your contents insurance covers this. Being underinsured could be a costly mistake.

3. Equipping the premises

Plant and equipment can be insured on either a ‘replacement as new’ or an ‘indemnity’ basis. With indemnity, wear and tear will be taken into account when settling any claims.

4. Branching out and buying your own premises

Whether this is a shop, industrial unit or office, you need to take out a commercial insurance to protect you against a similar set of perils that you would expect to receive under a residential building insurance policy - risks such as damage, fire, flood etc.

5. Taking the customers and business contacts into account

Public liability insurance provides protection for non-employees who may be injured or have property damaged while on your premises or during work carried out by your company.

5. Taking on staff

Even if only one employee is recruited, the law requires that a business takes out Employers’ Liability Insurance. This gives cover against injury or illness sustained during the course of a worker’s employment.

6. Retaining and motivating staff

Employee benefits such as private medical insurance are highly rated by staff. They can act as an effective way of helping retain staff as well as fulfilling an employee’s medical needs. A healthy and motivated workforce also leads to better productivity.

7. Keeping your business going

Business interruptions, even minor damage to premises or machinery can cause major disruption to a business generating extra costs and a loss of income. Business interruption insurance will compensate for a fall in gross profit and also meet any additional working costs.

Ms Simkins added: “The ‘seven ages of business’ checklist is applicable to most commercial operations and it demonstrates the importance of business owners regularly reviewing any safeguards and policies they have in place as a firm evolves and grows.

“Often as a business expands more tailored packages are required to meet a company’s specific individual needs.”

Henderson’s Teesside operation is in George Stephenson Way, Preston Farm, Stockton, where its staff numbers have grown from four to more than 40 since the office was established in 2009.

This was posted in Bdaily's Members' News section by Recognition PR Business Team .