Risks of running your business from home

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Today, starting a home-based business is more popular than ever. In fact, a survey from IncFile found that there are 38 million home-based businesses in the U.S, with a new home-based business starting every 12 seconds. 

There are many benefits to starting a business from home. Running a home-based business significantly reduces overhead costs, which is great news if you’re just starting out. It’s also convenient, you won’t have to spend time or money commuting to an office since you’re operating out of the comfort of your home. 

Of course, as with any business, there are risks involved that you should be aware of.

  • Damage to property: Natural disasters, like fires, floods, and severe storms can strike and cause havoc to your property. Make sure to store important business documents in a fireproof box and away from flood-prone areas such as the basement. Also, make a list of all business assets to make it easier to file a claim if any are ever damaged. You might think that you’ll be covered with a standard homeowner’s policy, but this is usually not the case as most personal insurance policies will not cover any business-related claims. An essential part of protecting your home-based business is Commercial Property insurance. 
  • Business interruption: Natural disasters and other accidents can also put a halt to your business operations. It’s important to set up a business recovery plan that outlines what needs to be done to keep the business running. Business Interruption insurance can cover the revenue that’s lost during this period to make sure your business stays running.
  • Cyber-related attacks: It’s a common misconception that small businesses aren’t targets of cybercriminals. A recent survey from Verizon found that 43% of all data breaches involved small businesses. It’s your responsibility to keep valuable and sensitive data protected. A single claim associated with a data breach, network failure or identity theft can mean significant financial losses or worse, it can force your business to shut down. Make data privacy and security a priority. Purchasing Cyber Liability insurance is a must. In addition, you should install updated antivirus software and use strong passwords on your accounts. It’s a small price to pay compared to the hundreds or even thousands of dollars that you may lose because of a cyber-related attack.
  • Sickness and injuries: If you’re the sole proprietor of your business then your entire income depends on your ability to work. You may not be able to afford to be sick or injured for a long period of time. It’s essential to have a backup plan to ensure business expenses can be taken care of in your absence. If you do have employees chances are you’ll be required by the state to have Workers Compensation insurance to ensure they’re protected against work-related injuries and illnesses. 
  • Lawsuits: Running a business from home is not free from liability. If a customer slips and falls on your property, you could face an expensive lawsuit. Or, a customer could accuse you of selling a defective product or providing wrong information about a service. To minimize the risk of claims you should always prioritize safety. Even small changes can decrease your liability. For example, always make sure stairs and walkways are free of debris to minimize the chances of someone slipping and falling. It’s also essential to have the right insurance policies to protect your home business against financial losses. Consider buying General Liability to cover your business against claims against third-party property or bodily injury. To guard your business against claims of errors or mistakes made while providing professional advice consider Professional Liability insurance
  • Privacy concerns: Your home is now your office, but it’s important to maintain some privacy. Set some guidelines for clients or employees who come into your home and politely let them know which areas of the house are off-limits. In addition, consider using a P.O box in order to keep your business and personal deliveries separate.
  • Traffic and zoning risks: Adhere to parking and traffic laws in your area. Consider the number of customers, employees, and clients that will drop by your home-based business. Do you have enough parking space? Does your town allow street parking? Know the rules and regulations regarding zoning, traffic, and parking to avoid any inconveniences, and fees later on.

Running your business from home is a great idea not only for cost reduction but also for convenience as it enables you to spend more time with the business as well as your family. But just like running a business in a physical store, having a home-based business involves some risks. 

The key is to understand what these risks are so you can take the necessary steps to make sure that your business runs smoothly with minimal interruptions. It’s essential to carry the right insurance to protect your business in case of an unforeseen event. Hire a reputable insurance provider to help you assess the potential risks and determine which types of policies meet your business needs.