Protect My Business

Insurance

While it’s likely you carry some level of insurance on tangible business assets such as inventory and office or manufacturing property, there are many other important areas of your company that you might have overlooked. Regardless of the type, adequate business insurance coverage protects you from potentially devastating financial losses. Take some time to review the following types of business insurance most commonly available, then ask yourself:

1. Are we covered where we need to be?
2. What more do we need to insure?
3. What are the risks that face the business?
4. For what dollar amount do we need coverage?

Property Insurance.

Property insurance protects your place of business against fire, theft, and other damaging events. While there are differences in coverage depending on whether you lease or own, property insurance typically covers the building, fixtures, and finishes (carpet, drapes, etc.) where you do business. Property insurance also allows for coverage of the contents in the building (desks, computers, inventory, etc.). Make sure you value your property accurately and insure accordingly. Remember, you’ll likely need to update coverage as the amount of property you have changes.

Liability Insurance.

Liability insurance covers you for events or accidents for which your business is legally liable. If a customer slips and falls in your store, if your product or service harms someone, or if one of your employees hurts someone in an accident, liability insurance can provide coverage for claims made against your business.

Key Employee Insurance.

Especially important to small businesses with limited staff, key employee insurance covers the potential loss of business income resulting from the death or disability of a critical team member. Review your employee roster. If you’ve got a staff member who consistently generates a significant percentage of total revenue or one who runs all daily operations, consider insuring that person for the amount you may lose (reduction of revenue, stoppage of work flow) if he or she becomes incapacitated. Remember, that key employee may very well be you!

Business Interruption Insurance.

Let’s say a major storm causes the roof of your manufacturing center to collapse and destroys three pieces of machinery necessary for your production process. What will you do while you wait for the new equipment to be delivered? For the roof to be replaced? You’ll likely lose money. Business interruption insurance covers you for the income you lose if your company is not able to function as a result of a catastrophe or major accident. Insurance policies and costs for business interruption vary greatly depending on your location and its associated risk for natural disasters. If you consider this type of insurance for your company, be certain you fully understand limitations and exclusions of any proposed policy.

While there are other types of insurance available for companies with highly specific operating models or needs, the main thing to remember when you consider policies for your business is that you secure and maintain adequate coverage amounts. Never skimp.

Consult with a reputable, trustworthy business insurance agent to determine the types and amounts of insurance best suited for your business.

Intellectual Property Protection

Intellectual property is a term used for special business assets that are a product or creation of someone’s mind. If your business income relies on intellectual property, it is imperative you do what you can to protect it from theft or unlawful use.

Intellectual property is typically divided into 2 categories; Industrial and Copyright. Industrial property consists of inventions, industrial designs, and trademarks. Copyright property includes items such as music, novels and poems, plays and films, paintings and sculptures, photography and drawings, and architectural plans.

In the United States, there are 3 primary ways to protect your intellectual property which, in turn, will help you protect your profits.

1. Patent: An exclusive right granted for an invention or discovery that’s practical in its use, delivers new or improved technology in its field, and whose subject matter is deemed ‘patentable’. When you apply for and are granted a patent for your invention from the U.S. Patent and Trademark Office, it effectively bars anyone else from using your invention for commercial purposes without your express permission for the length of the patent term. If your company’s invention has direct impact on your market share and revenue, protecting it with a patent can help you avoid erosion of both by limiting ‘copy cat’ competitors. A typical patent term is 20 years and can be renewed by the holder.
2. Trademark: A unique sign or symbol that easily identifies a particular good or service as being produced by a specific company or person. Registering your trademark prevents competitors from using your sign or symbol on their own products or services.
3. Copyright: An exclusive right to use or allow others to use your copyright asset on agreed terms. A copyright gives you ultimate control over actions such as the reproduction, adaptation or translation, performance, broadcast or recording of your intellectual property.

Business Succession Planning

Whether you’re a family business owner considering retirement or an entrepreneurial management group hoping to sell, the key to a successful transition is early and continual planning. Not only will it establish clear direction and expectations for the future transition, it can also help improve business practices and protect the value of your business today.

Tips for developing a solid business succession plan:

Involve your staff.

When you engage your employees in the succession planning process, you establish a sense of responsibility and ownership. This can help boost morale and spur staff members to renew their commitment to the company.

Consult the experts.

Make sure you work with a reputable attorney, financial planner and tax professional to help you examine ownership, valuation, and tax issues with an objective eye.

Find tomorrow’s leaders.

The future of your company depends on the strength of your leadership. Identify those with the skills and attitude that will help the company grow, then groom them for leadership positions.

Don’t forget your values.

As you develop your succession plan, make sure it’s in line with the company’s core values, key competencies and positions, and performance goals.

Correct weaknesses.

Developing a succession plan will force you to review all of your current business functions carefully. Doing so will quickly reveal current staff, skill set, and technology weaknesses. Correct those now. You’ll likely improve the bottom line today and preserve it for the transition.

Ensure continuity of talent.

If your staff, on the whole, is aging and nearing retirement, you’ll need to implement a plan to develop new talent to ensure the skills necessary for smooth transition and successful operations after you’re gone.

Define your role.

Will you hang around after new leadership takes over? Will you continue to draw a salary? What will your compensation package look like? The answers to each of these questions will have a direct impact on future operations, so take time to define your role now.

Calculators & Guides

When it comes to making financial decisions for your family or business, it's critical you have the right numbers on which to base them. RBC Bank provides a variety of financial tools and calculators to keep you informed on whatever topic is giant in your life.