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Understanding Commercial Insurance Risks and Business Insurance Covers

If you own or manage a business, either large or small, you will require some type of insurance to protect your company against the various risks and potential multitude of claims, that your business will face.

Commercial insurance or Business insurance as it is commonly known, is a complicated area of underwriting and because all businesses are different, and face different risks depending upon the nature of the company, various packages and combined policy covers have been introduced by insurance companies and commercial broker schemes, to make the process easier.

An example of a small business insurance package which is commonly sold online is the Tradesman’s insurance package, which includes all elements of cover required by a small business or self employed trader such as basic liability covers and theft of tools.

Other small business insurance packages that are trade specific and can often be obtained online are available for shopkeepers, offices, surgeries, hotels and guest houses, restaurants, public houses and builders.

Large companies will be offered what is known as a commercial combined policy which has many different elements of cover which can be combined to make a bespoke policy for the enterprise. Most large companies will require some degree of risk assessment before the policy is underwritten, which may often include a visit to the business premises or site, and for this reason these types of larger business usually employ the services of specialist commercial insurance brokers.

Business Risks

The largest risk that a business faces is from liability to others, and the potential costs and damages a company could face if a claim was made against it.

All companies are required by law to have in place liability cover, called Employers liability insurance or EL, to protect their staff against all potential risks and accidents  while in the workplace.

Business liability insurance is usually sold as a package and will always include Public Liability, often just known as PL, which protects the company against claims from the public whilst on the business premises.

A further type of liability insurance called Product liability is also available to companies under a commercial liability policy which protects the company against claims made for design or manufacturing faults in the product.

Company directors can also protect themselves against liabilities with Directors and Officers insurance (D&O) cover.

Property Damage

Most business large and small will have premises that need protection against buildings perils such as fire and flood and commercial property insurance is available to cover all buildings insurance risks. Similarly commercial contents insurance for business premises is available which covers office and business equipment including files and data processing against the common perils. For companies that carry stock, this type of business contents insurance can be extended to cover risk such as deterioration and damage.

For the small businessman who works from home these covers are often available with strict limits of indemnity, as a bolt on to a standard home buildings and contents policy. This type of cover is often effective for self employed people with just a computer and a home office.

Business Contingency Cover

One of the largest problems faced by a business is that of how to continue in business should the worst occur, for example a fire that destroys the premises. In order to deal with this Insurance companies have devised a cover called ‘Business Interruption Insurance’. Based on your previous years annual turnover, this protection insurance covers your company against all losses caused by interruption to trading due to any of the perils mentioned on the policy and will pay out on a indemnified basis for the period of cover agreed in the policy. Most policies will also offer some type of alternative trading accommodation to enable you business to continue whilst the premises are being repaired.

Additional Commercial Risks

Because commercial insurance is designed to cover all classes of business, there are many various trade or business specific covers available which can be added to a combined policy. Examples of these covers include loss of licence to trade, glass cover, goods in transit cover, book debts, commercial vehicle insurance, hauliers cover, warehouse cover, engineering insurance and plant inspection services, and theft by employees.

Outside of most combined policies are additional risks more often sold under separate policy covers, that should be considered to protect your business against all eventualities.

Examples of these are, Commercial Legal Expenses insurance cover which protects the company against claims made by employees for unfair dismissal and allows you to bring cases against suppliers.

Various protection policies are also available for businesses including Keyman insurance which provides cover against the loss of key people within your organisation. Business mortgage protection provides a monthly payment for business premises should you suffer and accident or sickness. Group ASU policies are also available to protect your staff and employees.

Purchasing Business Cover

Purchasing commercial risks insurance can be a daunting experience for the uninitiated small business owner and unless the risks are straightforward and can be underwritten online, it is advisable for all companies to approach the services of a local or regional commercial insurance broker. Insurance Brokers will not only be able to assess the complete range of risks that your business is exposed to, and provide the correct levels of cover, they will more often than not have a unique local knowledge of the risks involved and will be able to negotiate premiums that reflect the nature of the risks. Furthermore, in the event of a claim, and as most businesses will be faced with claims at some point in their trading life-cycle, the broker will handle all the settlement negotiations with the insuring company and allow you to continue what you do best – running your business.

How to Use the Law of Attraction For Your Business

Here I will give you some basic details of what steps to take and what works for me. I will also include some references that I think are for the modern day people (Simple and Efficient Techniques that Work)

For those of you who do not know what the “Law of Attraction” is, read below:

The Law of Attraction states that like attracts like in its most simplest definition. What I mean is, if you hold thoughts of negative events within your mind, you are bound to experience those same events in your life.

The same works for positive thinking. If you are keeping wonderful and positive thoughts within your mind, you can bet that you will be receiving those thoughts in your life.

How does this relate to business? Well, some people know about the Law of Attraction and they also own their own businesses. Some people know about the Law of Attraction and they still think that they cannot build their own business. There are also some people who think that the Law of Attraction does not work for them within their business. Unfortunately, there are some people who know nothing about the Law of Attraction and are failing miserably in their business.

I have some good news. There are many people out there today who are teachers of this information. They link and lock in tools necessary to build your business and accomplish the results that you desire and deserve.

Once you start to learn how to implement the Law of Attraction in your business, you will start to be amazed by the results that come before you. People will start to show up in your life to help you accomplish your goals. Money will start to come in to help you with capital needs and you will start to see other things all around you that you did not see before you started to use the Law of Attraction.

Below I will show you some of the simple and basic steps in building your business from scratch using the Law of Attraction.

Contrast for Clarity, Step #1 Contrast for Clarity is simple, but this is one of the most important steps in showing the Universe what it is you want. If you give the Universe mixed thoughts and feelings, the results or what manifests will be an exact match (mixed) and therefore not being exactly what you really want. So, lets take a look at Step 1!

On the top of a sheet of paper write “My Ideal ______” This could be your Ideal Clients, Business Partners, Advertising, or anything you feel as though it needs some working on. It is good to break your business down into sections like these so that you can take the time to look at what you don’t want and what you do want at each portion of your business.

Fold the paper evenly one time so that you have two long columns with the longest part of the paper being the two columns

On the left side of the paper you are to write what it is you do not like about your business (i.e. For “My Ideal Clients”, I may write, “I do not want clients who are hard to find.”)

Do this step 5-10 times

I do realize that some areas of business may need more improvement than other sections, but 5 items should help get you to some great clarity for now and 10 should do the trick if you need it.

Also, do clarity for contrast step more than once for different areas of your business that you would like to work on. Some examples could be your clients, income, vacation time, or even your stress level. People desire many different things and will also need help in different areas. Some people may do well with attracting loads of money in their business, but are leading lousy businesses due to stressful events.

You know what you and your business needs the most.

Now you want to take each negative item and write out the positive statement on the other side of the paper next to the negative item (i.e. So, instead of the statement “I do not want clients who are hard to find”, write “Clients come frequently and easily” on the right hand side. This will give you the opposite of the negative thought.)

Remember that you want to do that for all the subjects that you feel needs improvement (i.e. “My Ideal Income”, “My Ideal Product”, “My Ideal Training”, “My Ideal Time Freedom”).

This is your business and you are the creator of your business. Take your time and realize that you can have whatever it is that you desire. Remember to DREAM BIG!

Let’s Take a Look at Step #2

Combining Your Desires To Complete Your Business Success Using The Law of Attraction A great step in becoming clear with your ideal business is combining your results from your contrast for clarity papers and making a script.

This is what I mean:

You created a list of negative results you may have when building a business. Then you established a positive statement to turn that negative statement around. Your next step is to create a one page script or desire statement by combining your positive statements

This should be fun…You are now becoming aware of what your desired business looks like with complete clarity. You should have at your fingertips, your complete picture of your ideal business. Make it almost as if you are telling someone about your business. More than one statement can be expressed in one sentence within your statement (i.e. “My ideal business is filled with quality recurring customers who are happy and receives tons of valuable information from me. The income that is produced from my business is $5,000 or more each week and I am able to give 10% of my income to church with extra income left over. My business has produced over $100,000 worth of sales for my associates….”).

The next step is extremely important, but I do not place either of these steps more superior than the other. All of these are required and should be utilized to get the engine ignited within your business.

Step #3 What To Do Now?

You may be thinking, “wow, this is neat, now where is my dream business?”

Well, here is another important step you can take to get your desired business results.

You have to learn that statement and be able to state it out loud whenever you think about it.

Be certain to:

Sate and FEEL your statement 3 times a day: 1. First thing in the morning. 2. Midday 3. And right before you go to bed.

You can start off reading this statement, but eventually you are going to want to be able to repeat your desired statement from the heart.

The most IMPORTANT thing you want to make sure you do when saying your statement out loud is to feel the feelings of having those things you desire while you are reading.

For some of you, who are already familiar with The Law of Attraction, may already know that the feeling in your statement is the driving force in establishing your desires.

And for those of you who do not know this: THE FEELING IS THE DRIVING FORCE IN ESTABLISHING YOUR DESIRES!

Excuse that bad netiquette, but this is one of the most forgotten facts when trying to attract anything through the Law of Attraction. It is sometimes the only reason why some people are failing at the Law of Attraction. You have to put feeling into it.

This may seem odd at first and you may not believe the statements that you are faithfully stating everyday, but that is the point of this exercise. You have to come to the belief that you can be, do, or have anything you want in your business.

There are only two ways you can establish your beliefs. Through Impact and Repetition.

This exercise is helping you through Repetition…You add the feelings…and reap the benefits.

Guess what? There is one more important fact I want to introduce you to. It is common sense and even those who do not complete this step already know that it is needed, yet so many people fail to do it. And that is…Take Action.

Taking Action is an important step when building your business while using the Law of Attraction, yet most people ignore this fact. Some expect for techniques like the one above to be all that is needed to make this happen.

Taking Action:

If you think that this is all that is needed to establish your business, you are up to a rude awakening. Now, no one said that your Action had to be hard or painful, but there is always action when receiving. When you are wanting to receive this dream business of yours, realize that you will always have to act to receive. Action can be as small as holding a door open for someone who in turns, offer you a business proposition just by her instincts. Action can be as big as working 12 hours a day for a month to get a huge and successful business off the ground. If you are doing everything right, Action should for the most part, feel effortless. I love the word EFFORTLESS!

You may have done a lot of work during those 12 hours a day, but having that work feel fun and exciting is what you are looking for. Make it feel good by taking inspired action and enjoy your journey!

I tell people, act like you already have it. Do the things you would do if you were already there. That is most if not all Law of Attraction teachers preach out there.

What are you doing? GO TAKE ACTION!

Much Love, Robin Williams (Not The Actor)

How to Determine Selling Price When Selling a Business

Selling a business can be a challenging undertaking. For most people, they have not been through the business sales process before and are surprised to learn how different it is when compared to a typical real estate transaction.

The entire process of selling a business is usually much more involved and can be much more complicated. For instance, finding an appropriate business buyer, qualifying leads, maintaining business confidentiality, tax issues, asset sale vs share sale, due diligence, VTB financing, transitions, employee issues, liabilities, working capital… and so on.

Besides all of these issues though, probably the most confusing issue for many owners when selling a business is determining an appropriate selling price. For most people, determining a selling price (or business valuation) is a mystery. It is one of the most important decisions a business seller can make though. Setting the selling price too high will discourage potential buyers from inquiring about the listing. If the price is set too high and it stays on the market too long it may lead to red flags (buyers may think there is a problem with the business if it is listed for too long). Conversely, setting a selling price that is too low is not good in that a business owner is not realizing the fullest value for their business.

There are some common useful methodologies that can be used to assist in determining the listing price of a company when selling a business and help arrive at a fair number.

Discretionary Earnings Multiple Method
This method is a common way that small businesses are valued. It is a (relatively) easy method to determine a business’s listing price and is quite intuitive. Essentially, the concept is to determine a business’s ‘discretionary earnings’ that it delivers to the owner and then applying it to a multiple to determine the value of the business. A simple example – if the discretionary earnings of a business is $150,000 and it is determined that the earnings multiple is 2.2x then a valuation of approximately $330,000 would be appropriate ($150k x 2.2).

It is important to properly calculate ‘discretionary earnings’. A qualified business broker or business appraiser can assist you with the calculations but the concept is to calculate the earnings available to an owner as a result of running the business. It usually involves taking pre-tax income and adding back some discretionary items like owner’s salary, personal items and so on.

The next step is to determine the right multiple. Multiples vary by industry, geography and time so it is important to get a supportable multiple that is in line with the market reality. Again, a qualified business broker or business appraiser can assist you. If you are selling a business please work with a professional to help you determine a selling price.

Discounted Cashflow Method
A much more sophisticated method to determine the selling price of a business is the discounted cashlow methodology. Essentially, the concept is to forecast the cashflow that the business will generate into the future and then discount the stream of future cashlfow that has been estimated back to the present by applying a cost of capital. Confused yet??

The principle is that a business is worth the ‘present value’ of the future earnings it will generate; adjusted for time (a dollar earned in the future is worth less than having a dollar now). So, when a business buyer buys a business, he or she are really buying a stream of future cashflow. The earnings that the business will generate in the distant future are worth less than the earnings it will generate in the near future so time-based adjustments need to be calculated.

Please bear in mind that this methodology is generally not used for small businesses. If you are selling a business that is mid-sized or more complicated you may encounter this methodology.

Asset Based Business Valuation – use caution
Please use extreme caution if you want to value your business based on the value of the physical or tangible assets. Often, business sellers believe that the only way to value their business is by adding up the market worth of their physical goods. This is could lead to a costly underestimation of the business’s value. This approach does not factor in the intangible value that is inherent in the business (example – goodwill).

For instance, suppose an owner of a very profitable service based company with very little ‘hard assets’ were selling and he or she decided to value the company based on the market value of these hard assets. The owner would be grossly underestimating the business’s true value by neglecting to take into account the company’s goodwill and any other intangible assets.

If you are selling a business and want to base its value based on the tangible assets, please use caution and consult with a reputable business broker or business appraiser.

Sometimes emotions can work against you
Many times business owners get emotionally attached to their companies. Especially those that have built their businesses from scratch and have personally invested years of hard work. Selling a business is more than just a business transaction. Emotions must be acknowledged – and managed. Oftentimes, these owners may think their business is worth far more than it really it (which is understandable and natural). Emotions can, however, get in the way of prudent business decisions so please take care to not make selling decisions (or pricing decisions) based on an unsupportable value.

Please bear in mind, there are many other detailed issues surrounding a business valuation that must be considered that can impact the methodology used when selling a business (for instance, an asset sale versus a share sale). This article is a general overview of the process and a brief summary of a couple methods used. If you decide upon selling your business please consult with a professional about determining a fair market price for your company.