Many Advisors recommend that business owners include a careful assessment of risks faced by an enterprise, no matter how small. Risk management starts with identifying various exposures to risk and then deciding on the best way to deal with each of them.
With each exposure to risk, determine how serious it would be, and whether the loss is one that you could afford to bear or whether you need to find a way to offset that risk in some way.
One of the first things you should do as you draw up your business plan is to make contact with a capable and well-informed commercial insurance agent.
Shop around to find an agent who is able to communicate with you and (this is hardest to find) willing to put your interests above all, even above his or her sales commission.
Ask friends, family, and business acquaintances for recommendations One way to deal with the possibility of risk is to mount an active campaign to reduce exposure. For example, you might choose not to accept very valuable items for repair unless the owner relieves you of liability or pays for special insurance coverage.
You might choose not to sell particular products
because of an increased likelihood of liability: for example, trampolines, diving boards, and weapons.
You might choose to insist on replacing broken parts with new ones instead of making repairs, because new parts have higher reliability. You might choose to accept a babysitting job but refuse to transport children to or from school or other activities.
Some insurance companies will provide free or low-cost consulting services to their clients to help them reduce exposure to loss, something that benefits both the policyholder and the issuer.
Another option is risk retention or self-insurance.
A business might decide it can accept occasional losses as part of the ordinary cost of doing business and build the expense into prices. A garden nursery cannot expect to collect for the loss of a few plants because of an unexpected freeze; the selling price for healthy plants includes an allowance to cover previous or anticipated losses.
This is the sort of decision we might make for our personal automobile: If it is more than a few years old and has declined in value, it might make sense to eliminate collision coverage and reduce the value of the replacement cost. (At the same time, you would not want to skip on liability coverage to protect you from claims for damage to others or to their property.
BUSINESS INSURANCE AND RISK MANAGEMENT
The third option is to transfer the risk. This can be done by purchasing insurance for your company, or you may be able to find ways to have others assume risks as part of your business relationship with them.
One way you could transfer risk would be to hire an independent trucking company to make pickups and deliveries for your company.