Despite predictions of the U.S. slipping into a recession in the second half of 2023 or early 2024, the country is leading the way when it comes to startups. As of June 2023, there are more than 72,500 startups in the United States Circus Insurance.
Among Northeastern states, Connecticut (CT) is setting records for new startup businesses. The U.S. Census Bureau’s most recent analysis reveals that around 23,600 people filed notices with the IRS (Internal Revenue Service) between 2021 and 2022 to start new companies in Connecticut.
While the U.S. is home to thousands of startups, do all of them succeed in the market? No. Shortage of funds is cited as the primary reason why startups fail. However, legal issues such as regulatory compliance, intellectual property disputes, and lawsuits are also reasons behind the collapse of startups.
How do you protect your business from collapsing, then? By insuring it. In this guide, we’ll discuss why insurance is vital for your startup.
#1 It Might be Mandated by Law
Your business could have legal troubles if you don’t insure it. That’s because many states in the United States require every business, irrespective of whether small or big, to have insurance.
Depending on your business type, yours may not require insurance to operate. But bear in mind that every business with employees is required to have disability and unemployment insurance and workers’ compensation. The federal government has made this mandatory for businesses.
#2 It Will Help You Retain Employees
Making money is your goal, but will it be possible if all your employees quit? Definitely not. Your employees are as valuable as your clients, so they should be your priority. That is why you should opt for liability insurance, as it will make them feel safe while working with you. Besides, it will protect them from losing their job in case someone files a lawsuit against them. Consulting a specialized insurance broker can assist you in choosing the right liability coverage for your business needs.
Insurance isn’t only beneficial in retaining employees. But it will also help your startup attract potential employees.
WalletHub, in its report on the Best and Worst States to Start a Business in 2023, disclosed that Connecticut was ranked as the second-worst state to start a business, with Alaska as the worst state.
In these states, employees hesitate to apply for jobs in startups, as 20 percent of them fail within one year. Therefore, business insurance in CT is essential, especially for startups. Otherwise, you could lose on employees that will take your business to the next level.
Many businesses simply opt for a policy that offers bare minimum coverage to their workers. However, Byrnes Agency advises businesses against this. That’s because an insurance policy offering bare minimum coverage will make it vulnerable to liability. For instance, if you operate a business in a high-risk industry such as construction or roofing, you will probably require more coverage than a retail store.
In a nutshell, opt for a policy that offers decent coverage so that new employees don’t think twice before joining your organization.
#3 It Covers Natural Disasters, Theft, and Vandalism
Imagine an earthquake occurs, and your commercial establishment collapses. It’s no less than a nightmare for business owners, especially small ones. Property damage caused due to natural disasters like earthquakes or floods often results in hefty damages. As you’re already on a shoestring budget, how would you get your establishment repaired without any financial backup? That’s where property insurance will come to your rescue.
If your property gets damaged for any reason, you won’t have to spend even a dollar on repairing it if it’s covered by insurance.
Besides natural disasters, commercial property insurance offers coverage against theft as well as vandalism. A recent article by CT Insider highlighted that stores lost around $86.6 billion to retail theft in 2022 in Connecticut— that’s a whopping amount. Crime experts have warned businesses that retail theft is on the rise in Connecticut.
In case your small business falls prey to thieves, you won’t have to shut the establishment permanently, as insurance will cover the expense.
Vandalism is yet another common offense in Connecticut. While misguided youths are believed to be responsible for vandalism, many adults are arrested as they are found guilty.
Defaced property, destroyed signage, landscape sabotage, and broken windows are forms of vandalism in commercial properties. Beyond the cost of repairs, vandalism can damage your reputation to a great extent. Without business insurance, you will have to bear the cost yourself, which will take a toll on your finances.
Protect Your Startup Today
No business ever steps on the market thinking it will be under fire someday. But unfortunate things happen, and there may come a day when you will find yourself on the wrong side, either due to your employee or client. Having business insurance will save you from the financial ordeal you will have to go through otherwise.
Business insurance also comes in handy when your business faces a loss due to theft, vandalism, or natural disasters. With business insurance, your day-to-day operations will be carried out smoothly and efficiently. Therefore, it’s time to get one for your startup.
