You’re learning as you go when you launch a business. Some days feel like progress, others like survival drills. The most successful businesspeople, such as Richard Branson, Elon Musk, and Jeff Bezos, have repeatedly emphasized the importance of embracing the inevitable ups and downs in starting a business.
And here’s the issue, the surprises aren’t always good ones. A supplier lets you down. A payment is delayed. Something breaks that was fine yesterday.
That’s where business protection for a startup without cash flow becomes essential.
Read on for reasons every startup needs business protection.
Why Startups Need Business Protection
A startup is momentum in motion. You’re chasing deals, moving fast (or at least trying to), and probably juggling more roles than your job title suggests. That’s exciting, and it definitely makes you want to cry. The stress of trying to make a startup successful, especially if you’ve invested a heavy amount of money into it, is so high.
All it takes is one curveball to throw off the balance. Maybe a customer refuses to pay (you’d be surprised how often this happens). Maybe a storm floods your workspace. Maybe your idea gets copied before you’ve even launched properly (again, you’d be surprised how often this happens).
When you have protection in place, you don’t have to suffer so much, and your business doesn’t have to stop.
It’s the simple fact that the majority of start-ups can’t afford it when things go wrong. 90% of startups fail, and 29% of them do so because they run out of money.
The Essentials of Business Protection
Most startups should start with four basics:
- Professional indemnity
- Public liability
- Cyber insurance
- Property and equipment cover
And always check the intricacies of these policies. If you work abroad, check whether “worldwide” means what you think it does. Sometimes it doesn’t. You need a policy that meets your every business needs. You can get free online quotes from Next Insurance that will give you an idea of how much it will cost for your business.
For us, business protection insurance policies are the best place to start before you think about cyber insurance and policies that aren’t as comprehensive.
When to Use Your Insurance
Calling your insurer isn’t admitting defeat. It’s using the thing you’ve been paying for.
If your ability to trade is affected — even slightly — don’t wait. Burst pipe, stolen laptop, a client threatening legal action… Get it logged early with your insurer. Some policies have time limits that are shorter than you’d expect.
The things your insurance is likely to ask you for include:
- An explanation of what happened
- Evidence that proves your claim
- Statements
- Business documents
- The excess fee
Also, know your trigger points. Some insurers want to hear about potential claims, not just the ones already in motion. That vague “we might need to talk” email from a client? Maybe it leads to something your insurer should know about.
And the little problems? They can end up as a massive problem that you don’t want to deal with. A cracked screen on your main laptop means you can’t work. A minor data leak you think you’ve contained means customers are at risk of fraud.
Even if you never claim, you’ve got the event on record that you contacted the insurer.
How to Prevent Yourself From Needing to Use Your Insurance
Nobody wants to use their insurance.
Inspect your tools and tech before they break. Keep your software up to date. Hackers love old systems—they’re full of poor coding and open doors. Train your staff so safety and security aren’t just policies.
And then there’s the human side. Contracts that leave no room for “I thought you meant…” moments. Set clear expectations like costs, deadlines, intricacies of the services, and what you’re not liable for. We’d argue stating what you’re not liable for is the most essential to note. A little extra effort here saves a lot of stress later.
Even if your insurer covers the money, they can’t give you back lost hours, damaged relationships, or the project that slipped away while you were sorting the claim.
Business protection isn’t something you “add on” once you’ve made it. It’s part of what lets you make it in the first place.
You don’t need every policy out there. You need the ones that match your risks and your way of working.
