The constant worry of managing stock, covering costs, paying wages and dealing with the issues that come with employing people means business ownership can be stressful.
For many retail business owners, the greatest worry comes from the things you can’t control. What if your premises get flooded and you can’t trade for weeks? What if you are incapacitated and can’t work?
Insurance exists to help take some of your business worries away, although the range of different policy options can be very daunting. A good way to think about insurance is in three categories: insurance for your property, your cash flow and your legal liabilities.
Property insurance is the one category of insurance that most people have. It covers your assets, and for a retailer that means your stock, shop fit-out and motor vehicles. It’s the category of insurance you’re most likely to claim on, for example if your stock is damaged or stolen. So, as a retailer it’s important to make sure that any property insurance you have covers the replacement cost of both stock and shop fit-out.
The digital age has added a new dimension to insuring property. Today’s retailer has to think about protecting their digital and online assets like websites, ecommerce facilities and digital networks as well. If you get hacked and your online shop becomes unusable, or your customer data gets stolen, there’s going to be a cost involved to manage both the situation and your business reputation, as well as getting your business back up and running.
Most traditional property insurance policies won’t cover digital assets, so it’s important you consider taking out a separate cyber insurance policy to cover your business in the event of a cyber breach or cyber attack.
When it comes to cash flow, not enough small Kiwi businesses think of insuring their cash flow - but they should. Every business owner should consider having an emergency cash flow plan. Just ask yourself - could you survive without two week’s cash flow? What if an earthquake or flood meant you couldn’t get back into your premises for a month? Do you have a back-up plan?
There are number of different insurance policies to mitigate these risks for you and every retailer should consider holding at least one of these: business interruption insurance, payroll insurance, income protection insurance or key person insurance.
When it comes to legal liability, making sure you’re covered is critical. Even fewer small Kiwi businesses have liability insurance. Liability insurance is essentially for when something you’ve made, sold or done, or advice you’ve given, harms someone else or causes them to lose money. We’re living in an increasingly regulated and litigious world, so if you’re in business it’s something you just can’t afford to do without.
When all is said and done, the best way to work out the correct combination of insurance for your business to cover your property, cash flow and legal liabilities is to talk to an insurance broker. Getting advice that is tailored to meet your business needs is the best way to insure your worries away.
For more information on NZI’s business insurance, go to NZI.co.nz.
This story originally appeared in NZ Retail magazine issue 746 October / November 2016