The OC Entrepreneurial Spirit – Alive & Doing Well
With the Orange County, CA economy coming back to life, to a level we haven’t been accustomed to for a few years, there has been a sizable increase in people taking that giant step forward and starting their own business. Overall, this has been the highest rate of new entrepreneurs being created we have now than in the past fifteen years. In a perfect world, all these new companies that started would become successful, but, unfortunately, that isn’t the case. The facts say about 15% of them fail in the first twelve months, and almost a third of them are out of business by their third year.
The main cause for this type of failure rate is fairly simple – the new owner was not prepared, in other words, they did not have a viable business plan in place to guide them or would not be ready when a major disaster happened, and that incident closed their doors forever. Whether your business is that of contractor, retail owner, business consultant, web application designer, graphic designer, or one of many businesses that call Orange County, CA home, going into business without a viable game plan usually means the business will have a higher rate of failure.
When developing your business plan, one of your priorities should include the proper insurance coverage. In discussing insurance needs with new Orange County, CA owners, initially we understand how sensitive to costs they are, and if I have them list their business plan priorities, I’m sure insurance would not be near the top. Generally, many new company owners understand the need for California General Liability Insurance coverage, but seem to tune you out a little when you start discussing other coverages that will be invaluable to their business plan, and this course of action may not be the right one to take.
Most new company owners start out wearing many hats, and as we know, most times things are tight, so the odds of hiring an in-house risk manager are slim, and this is where having an experienced and professional insurance agent could be a welcome bonus in running their business. New companies just starting out can face risks that are not covered under a normal General Liability policy, including D&O, EPLI, professional liability, fiduciary liability, cyber liability, and environmental liability, to name just a few.
If your business consists of being an independent consultant, then having Professional Liability is a must, considering you are on your own. The first thing you normally hear from consultants is that those large professional liability exposures would never happen to them, but as we all know, things happen, and securing this type of policy could possibly be the difference between continuing the operation versus closing it should a claim come in.
Another area of concern which many business owners seem to dismiss is Orange County Employment Practices Liability Insurance, or commonly referred to as EPLI. In most cases, this type of coverage is very affordable, but one which is difficult to have clients purchase. Across the country, there has been a significant increase in employees filing claims against their employers for a variety of reasons, and with the costs associated with defending these types of claims, it makes prudent fiscal sense to have this type of policy. Just one claim with defense costs can run into five or six figures easily.
Cyber Liability Coverage is another type of policy we recommend to our clients, especially in this day and age of sophisticated hackers roaming the net. If you are going to conduct business on the web, keeping customers records and accept their payments, then acquiring a Cyber Liability Policy is an absolute must. Just stop and consider all the companies in the past couple of years that have been hacked. Could your company survive that kind of attack? If that answer is no, then a Cyber Liability Policy should be in your business plan from the start.
As experienced insurance agents, we know that no two businesses are alike, and with that in mind, we can recommend the types of coverages that will protect your business and give you some piece of mind so you can put all your energies into making your business a success.
Patrick O’Neill – Owner