From theft to storm damage to public liability – the common claims that affect small business and the best ways to avoid falling prey to them.
You lock up your valuables to protect them from theft, teach your kids about rips before leaving them alone in the surf and understand the rules before you hit the road. All these behaviours help you minimise risk and allow you to make informed decisions. So, if you do this in your daily life, why wouldn’t you also practice the same caution when it comes to your business?
As a small business owner, you have most likely already taken the steps to protect your livelihood by insuring your business. But how can you go one step further?
There’s an old adage prevention is better than cure – by understanding the most common insurance claims you will be better able to protect your business from falling victim.
Theft is one of the most common of all small business claims. In 2017 the Australian Retailers Association said theft cost Aussie retailers billions in lost revenue. So how can your SMB avoid being a statistic? While shoplifters and ram raids may get the headlines, interestingly shrinkage is the most common form of loss. With small businesses operating on slim margins this can significantly impact gross profit. So how do you protect your business from a light-fingered employee? Background checks could be a good place to start. While CCTV is both a deterrent for staff theft and shoplifting whilst also giving an opportunity to provide evidence to Police if needed. If you operate a brick and mortar store that is at risk from shoplifters, ensure you have adequate training for staff on how to deal with a shoplifter and introduce a zero tolerance policy on theft. This sends a message shoplifting is a crime and won’t be tolerated internally or externally. Caution staff to be vigilant but also be aware of customer rights and false arrest and the possibility of violence to the staff.
Unless you operate a 24/7 convenience store it is likely that your business is closed for at least some hours of the day, leaving it vulnerable to burglars. Retail outlets with their glass fronted display areas are particularly enticing to thieves. It’s important to ensure you have adequate security systems to protect your valuable assets. This can range from burglar alarms to toughened glass to installing security lighting and back to base systems. It’s also vital to keep a track of your stock. Investing in an inventory management system will ensure you will have real-time access to your business’s assets and will be able to identify losses should the worst occur.
Machinery and Equipment Breakdown
For many businesses, the equipment they use on a day to day basis is the heart of the business. From a baker’s ovens to a mechanic’s hoist, equipment failure could force a business to a standstill. If you want to avoid falling prey to a shutdown it’s important to follow the equipment manufacturer’s instructions. Keep your equipment and machinery well maintained. Ensure you implement regular checks and follow a maintenance schedule. If your equipment begins to malfunction – don’t ignore the warning signs – get an expert in to look over your gear as soon as possible so you can nip any problems in the bud.
Ah… mother nature… How would your business fare if a massive storm were to strike? A sudden deluge of rain could leave your business awash in stormwater unless you have taken steps to eliminate risks. The first step is to ensure your building is in good condition – no loose tiles, blocked gutters or overhanging trees. The roof, gutters and eaves are the most likely areas to allow water into your building, so be certain to include regular checks to confirm their integrity. Do you have a backup plan should the power go out? Particularly, if you’re in an industry where you have perishable stock. Consider the impact that a closure would have on your business should damage occur and consider investing in business interruption insurance.
As business owners, the last thing we want is for any of our customers to be injured on our premises yet slip and falls make up a large percentage of insurance claims. Keeping your business free from hazards is an obvious way to avoid these types of claims. Can you guarantee any walkways are free from hazards? For peace of mind, make sure they are clean, clear and dry. Pay attention to your lighting. Are your stairwells well-lit? No? Then it’s time to swap out those dim globes. Be certain access to any hazardous areas is limited to employees and that any dangerous equipment is in a restricted, zone.
While there is no magic vaccination to make certain your business is 100 per cent immune from a claim, being proactive and taking steps to minimise risk can reduce your chance of making one.
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