Owning your own business presents an abundance of benefits, but what about the risks? Australian business owners often neglect to think about the big picture of owning a business, including the risks. Your business may be providing you with a stable lifestyle, flexibility, and fulfilment, but financial, market, liability and security risks are lingering in the background.
Financial Risks In Owning A Business
One of the top risks that business owners need to understand is financial risk. Putting up your personal assets to fund the start of your business can be expensive with no guarantee of recovering the funds. The industry your business operates in determines how much financial risk you will have from upfront investments. For example, an electrician would need to purchase more equipment compared to a disability support worker.
Financial risk can also be used to describe the debt you secure with loans. Sole traders and partnerships often guarantee the debt and assume personal liability in the event of a default. If your business begins struggling for money and cannot pay obligations out of company funds, you may need to pay the loans from your personal assets.
Market Risks In Owning A Business
Market risk is another viable threat that business owners face. The market can be volatile based on political and economic events. If your business doesn’t adequately adapt to changing customer demands, you could lose market share, subjecting your business to continuity issues. One example of market risk is increased competition in the same industry. You will have to find effective ways to differentiate your services to keep generating sales.
Liability Risks In Owning A Business
Similar to financial risk is liability risk. This risk includes the threat of a lawsuit being brought against you or your business. If your business causes harm to a third party, you could be on the hook for monetary damages not only from your business assets, but also your personal assets. Certain industries, such as allied health, have an increased liability risk because they issue advice to third parties.
As a result, it is important for your business to consider obtaining public liability insurance, professional indemnity insurance, cyber & privacy liability insurance, or a mix of them all, which can be done through our instant quote generator, where you can get an estimate on market-leading insurance in seconds! Simply enter your occupation and expected revenue to get started.
Security Risks In Owning A Business
Security risk involves the threat of fraud as well as client confidentiality. Therapists and disability support workers need to maintain client confidentiality in all medical records. This can be done through investing in a secure tracking system. On the other hand, construction businesses face asset misappropriation due to the high level of equipment on hand. Frequent inventory counts and safeguards against who is using machinery is required.
Security risks can also involve your business’s financial information, such as bank accounts and credit cards. The risk of being hacked has dramatically increased in the past few years, making it beneficial to implement added security procedures. That's why many business owners are turning to cyber & privacy liability insurance. Check out our instant quote generator if you'd like to see how much a policy for cyber & privacy insurance will be for your business.
Summary
Understanding the different risks your business is exposed to is the first step in implementing procedures to minimise or eliminate them. Liability risk is an issue that all businesses face regardless of size. For more information on uncovering the right insurance packages for your business, make sure you get an instant quote today.
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