Most entrepreneurs start their own businesses from the comfort of their own home. Not only does a home-based business cut down on costs (i.e., rent, utilities, taxes), but it also gives you flexibility on when you work. The resulting hard work will pay off in a big way! That said, while you are working, anticipate and mitigate potential problems or risks as they arise. Failing to plan is a recipe for disaster that can cripple your business, especially from home. Here are the top home business threats you should be aware of.
What Is A Home Based Business?
To fully understand the risks of home-based businesses, we must first define what a home-based business is. As you can imagine, a home-based business is one operated from a residence.
In most cases, a home-based business will include freelancers or freelance services. However, it can also include consulting, crafting, baking, tutoring, virtual assistance or e-commerce. Essentially, it entails any business that uses your home as its primary place of operation.
1. Cyber Security Risks
If you’re like most small or medium-sized businesses in Canada, the internet is an indispensable tool for success in today’s digital economy. Getting online allows you to reach new customers and grow your business. And even if you don’t have a website — or a Facebook/Twitter account — you probably depend on the internet for everyday business operations, like banking, payroll or ordering supplies. One of the top threats to home-based businesses is your digital security. With cybercrime on the rise, small businesses are especially vulnerable to digital hackers. Whether it’s your database of clients, payment information or private data, most small businesses have a responsibility to keep their clients’ information protected. To mitigate this threat, you should:
- First, invest in a business-level internet router. Consumer routers are not designed with security in mind.
- Secondly, ensure your computers are protected with a firewall, anti-virus and internet security products, such as Kaspersky.
- Lastly, look into encrypting the most sensitive information on your computer with a service like Folder Lock, which is trusted by the government and even the military, to keep data secure.
2. Legal Risks
Did you know that many home insurance policies do not cover you for business-related issues? Liability is the greatest risk for home-based businesses. If you operate a sole proprietorship or small business from your home, be aware of, manage and mitigate your business risks. A separate business insurance policy for your home-based business can provide peace of mind.
In the event of a fall, property damage, or other situation where you might be liable, home-based business insurance provides you with an added layer of protection. We highly recommend you get a quote from us today to give you peace of mind and coverage. For some additional information on why you might need home-based business insurance, read our blog post here.
3. Robbery and Theft
One of the most common ways a home-based business becomes vulnerable is through robbery. This is why having adequate home business insurance coverage is important, as your home policy may not cover your business. In addition to insurance, consider upgrading your home security. Today, home security products are affordable, offer great features and have low or no monthly fees.
- Invest in a couple of high-quality home security cameras to watch the front and back of your property.
- You should also look at smart door and window sensors, which will alert you on your phone, email or tablet in the event of a breach.
- Trade a bit of privacy for added security. Trim trees and shrubs near doors and windows, and think carefully before installing a high, wooden fence around your back yard. High fences and shrubbery can enhance privacy but can also provide cover for a burglar.
- Shine a light. Force any would-be burglar out of the shadows. Exterior lights and motion detectors, mounted out of easy reach, can reduce the darkness shielding a would-be burglar.
- Consider storing easily stolen items that are vital to your business (such as laptops, smartphones and documents) out of sight and in a locked safety box.
A home-based business is a great way to take control of your career. In the same breath, it is crucial to consider home business threats that could disrupt your operations and take steps to mitigate them. Protecting yourself through digital security, home-based business insurance, and home security products is a great place to start.
4. Property Risks
A fire, storm, flood or other natural disaster that may harm your home will also damage or destroy your business’s property. It is important to list all your business assets. This should include the following:
- Inventory
- Equipment
- Computers
- Papers
- Digital Files
These assets should be protected. Consider keeping important documents in a fireproof box and storing inventory in a locked storage unit. This unit can be either inside or outside the home, as long as it isn’t easily accessible. To add to this, it is important not to store any business-related items in areas prone to flooding, such as your basement.
You can take an extra step to protect yourself from property damage by taking an inventory of your business assets as well as their value. When you do this, you prepare yourself to file a claim in the event your property gets lost, stolen or damaged.
5. Business Interruption Risks
Like any other business, home-based businesses can be forced to close due to events such as natural disasters. When this happens, you may be forced to suspend operations for a few days while you focus on recovery and cleanup.
To be prepared for this, it is important to plan. Create a business interruption plan that lays out how you will resume operations in the event of a major interruption. Whether it’s a natural disaster, power outage or family emergency, there are multiple ways your business can be halted. This is why being prepared is key!
It is also important to consider getting business insurance coverage. This way, you can have assistance when it comes to replacing any lost income. This coverage also covers key expenses you may incur when your business is interrupted by floods, fires, or extended power outages.
Home Business Threats and Insurance
Unfortunately, most people believe that their standard home business policy is enough; that is not the case. Most home insurance policies do not provide adequate coverage for business-related activities. This can include liability or damage to any of your equipment. In some cases, you may be offered a limited amount, but it generally isn’t enough to cover losses such as damaged equipment, broken computers, damaged inventory, or legal liabilities.
This is where home business insurance comes into play. This is a specialized type of coverage that protects your small business that operates from your home. Home business insurance can be purchased alone or added onto your home insurance policy as an endorsement. A Home Business Insurance policy will generally cover:
- Business Equipment
- Third-Party Bodily Injury
- Business Interruption
- Data Breaches or Cyber Liability
- Legal Fees
Home Business Threats: Conclusion
In most cases, you will want to consult your broker for advice on the type of insurance that best meets your needs. An important point to remember is that when conducting business in your home, there is always an increased chance of losses. To protect you, your family and your business, ensure your home-based business and residence are properly covered.
If you want to reduce the risk of home business threats and up your coverage, contact us today!
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