23/10/2009

By Alan Trueman, Business Interruption Risk Advisor for Aviva

Running a business can be a complex, though ultimately enjoyable and rewarding experience for the majority of small business owners.

Naturally, the day-to-day activities such as ordering stock, building a client base and making sales tend to take precedence. However the ability to plan ahead, to anticipate threats to your business, and to protect against these risks can be the real difference between success and failure.

There are therefore two things that discerning business owners should look to do in order to prepare and secure themselves against risk. Firstly, develop a business continuity plan in order to have a robust strategy for when disaster strikes, and secondly, ensure that you have the right commercial insurance policy in place to fully protect your business.

Experience proves that it is a lot easier to plan for the likely effects of potential disaster coolly and objectively in advance, rather than react in the aftermath. Planning for any disaster that can have an impact on your business is a key consideration so that you know what to do should the unexpected happen. For example, your business continuity plan could include twenty-four hour contact details for key staff members, a temporary location that trading can be relocated to, and customer details so that you can notify them if there will be an impact on your service or delivery time.

However, drawing up a continuity plan is only half the solution. Businesses also need to test that plan and its components fully on a regular basis to ensure it can be deployed successfully and quickly. For example, having an emergency power generator on standby is no use to a business if that generator fails when it is most needed. Likewise, staff will respond much better in a crisis if they have been through a simulation of a similar crisis prior to the event occurring.

Having an effective, well-tested continuity plan is essential for business survival to lessen the impact of any event and to some extent that will include the financial impact of any such disaster but alongside this it is essential to have the right insurance.

Surprisingly, research by Aviva in September 2009 indicates that this may not always be the case amongst small businesses. The recession has undoubtedly led business owners to cut costs and this may partly explain why 12% of those surveyed by Aviva claimed not to hold commercial insurance.

Insurance is not just there for fire or theft claims. If one of your staff, or a customer, has an accident at work it is unlikely you would be able to pay out any compensation costs, which could run into thousands of pounds, yourself. Employers liability for example, is mandatory. Protecting what you’ve already got and what you’re trying to build for the future should be fundamental for any conscientious business owner

Insurance need not be complicated or time-consuming. Aviva firmly believes brokers are best placed to ensure that you have the right level of insurance for your needs such as appropriate indemnity periods on your revenue protection cover or help with risk management to reduce the risk of an accident. So speak to your broker and make sure they are aware of any changes to your circumstances. For example, if you have reduced the amount of stock you are carrying or have changed the way you produce your stock. If you don’t already have one, visit; www.aviva.co.uk/yourbusiness to find a broker in your area.

Planning for a disaster may seem daunting, but armed with a sound continuity plan and the right level of commercial insurance business owners stand a much better chance of surviving an unexpected event.

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