Another year, another set of resolutions!
Having reflected on their lives over the Christmas holidays and reviewed how they can better themselves and their future, January has long been a month when many choose to throw off the shackles of working for someone else and take the plunge to go it alone.
The drivers behind the decision vary from being made redundant from previous employment – the inspiration for 20% of small business owners according to some recent research from Barclays. Turning a hobby into a business is a driver for 16%, while family and friends influence one in 12 small business owners. Age also appears to be another factor. According to Barclays the 55+ age group seems to be more inspired to start a business as they want to work for themselves (56%), while it is also high amongst 35-54 year olds (43%).
Putting the reasons why someone may have chosen to go it alone to one side, there is a huge amount to think through when starting up – not the least, where to base the business. For many, subject to the nature of the business, setting up shop from home is a viable and cost effective option.
This does, of course, open a fresh can of worms.
Whether a homeowner or a tenant, a budding entrepreneur may need permission from their mortgage provider or landlord to operate their business from home. If major alterations are required to do so, again it’s likely they’ll need to obtain permission – and not just from the lender or landlord, but the insurer will also need to be informed as any alterations may impact buildings and contents cover and more importantly most insurers tend to rate people who work from home differently and any failure to disclose this fact may invalidate any future claim.
When it comes to insurance, if you do have clients that have taken the plunge, it’s worth ensuring that they are aware of the key covers they will need to consider:
Contents insurance
Any existing home contents insurance should be reviewed as it may need to be amended or replaced to cover any business equipment kept in the home. If items are taken out of the house such as a mobile phone, laptop, gardening or decorating equipment, they’ll need to ensure they’ve extended any policy to cover these away from home.
Professional indemnity insurance
This is legal requirement for a number of professions as financial advisers well know, however many businesses – particularly those that provide some form of consultancy – choose to take out professional indemnity to protect themselves against claims. Clients may well insist that it is in place. Premiums vary dramatically from profession to profession, but it’s best to be covered as compensation can be pricey.
Public liability insurance
Often overlooked by those working from home, this is a necessary cover if members of the public or customers come to the home. It provides cover against accident, damage or injury to them when visiting the business.
Employers’ liability insurance
It doesn’t matter if any employee of the business is based elsewhere – in their own home for example. If your client has or is planning to take on employees, they are legally required to have this insurance in place. The only exception is if the person employed is a closely-related family member such as a spouse or sibling.
Car insurance
If a vehicle is going to be used for business purposes, any existing cover should be checked to see if it needs to be upgraded or changed.
The good news for any of your clients that have just started their own business from home is two-fold. Firstly, business insurance is a highly competitive market with many insurers looking to get a healthy share of the pie and so it’s possible to get excellent value for money policies.
Secondly, you – their trusted adviser – can help them rather than leaving them to work their way through the insurance maze to sort it out for themselves. While commercial insurance look like a step too far, it doesn’t have to be as the general insurance providers that you use for household and protection cover will generally have arrangements with their insurance partners covering commercial policies. Some, such as ourselves, will offer a referral service just as we do for personal lines business so you can be confident that you are entrusting your clients to a safe pair of hands.
Helping your clients with their personal finances can be a stepping stone to helping them with their business insurance, making you even more indispensable.