Maybe you’re a long-time independent contractor looking to expand the services you offer. Perhaps you’re an investor with a big idea and enough gumption to try and turn that idea into reality. At any rate, the first step on the path is creating a business plan. Not only does this keep you on track throughout your business growth, but it also helps you budget for the long-term success of your company. Though it may seem far-fetched, it is essential to go over the details of a business plan before you purchase business insurance.
While we are not professional consultants, we will help you understand why having a well-drafted business plan is important from an insurance company’s point of view.
A business plan contains the information:
- An executive statement: This generally includes the overall goals and growth plans for the company, as well as the projected costs required to start and maintain company funding, return on investment (ROI) estimations, or any other pieces of information that will help people get a first impression of what you are trying to achieve with your business.
- A company description: Company descriptions are just as they sound. You might think that there is no point in writing this information into your business plan if you and your partners are the only ones who will see it. But it is critical for others to remain on the same page when discussing the places where you envision your company later down the line. Describing your company in your plan makes financial considerations that much easier to communicate to others in the future.
- An overview of the management and employee traits: This will describe to people how your company is run, as well as give vital details that can determine what type of coverage you and your employees will need. Without a specific management and employee goal, company organization will remain scattered and mired in low growth potential.
- An analysis of how your business intends to shake the industry. Also known as market research, this outlines the projection of your company against that of your competition. For startups looking for funding, this part is especially important, because it shows that you are well-versed in your field as well as prepared to address the strengths and weaknesses of your competition.
- A marketing plan: Information regarding how you intend to make sales, gain clients, or secure bids once your business is open to the public.
- An overview of operations: The overview ought to include all employees and all key members of a business. Basically, this should outline in reasonable detail the day-to-day process of your company’s activities. This will help give insurance companies everything they need to know concerning how many people you will need to cover, whether it’s for general liability insurance or for worker’s compensation. Having an overview of your operations will also help your company prepare for the final phase of your business plan.
- A generous financial projection: If the phrase “better safe than sorry” ever fit with a business-related venture, it was with that prospective business’s financial projections. No business will ever know exactly how much money they’ll need to make each year to profit and grow, but calculating the bare minimum and the nominal amounts you expect your company to need is one of the best ways to stay in the black. It will also help you plan for potential insurance costs in the present and in the future.
Understanding your business plan means understanding your insurance coverage
Ultimately, it is up to you as an entrepreneur to decide how you run your business. Many family businesses work without a formal business plan because their future depends on the decisions of the generations before and after them. Some smaller businesses have never bothered creating a formal business plan. But in our experience, a client who has a business plan has almost always found success in their ventures. This is because it helped that client’s company understand its strengths and weaknesses, giving them the chance to gain more experience and more growth from those realizations. In the end, it is that experience and growth that provides insurance with a greater sense of confidence in your ability to avoid risk.
Companies that are in it for the long haul have a plan. They learn from their mistakes, and they have ways to solidify the customer relationships that keep them going. Including insurance in your business plan, even if it’s only a part of the solution for success, is still one of the best ways to secure your assets.
For more information on how you can build a brighter future for your business, contact Farmer Brown Insurance today.