Starting up a new business can be an exciting time for business owners. There are a lot of factors to consider including innovation, business planning, changing market needs, and ambitious growth. But entrepreneurs should always be diligent about ensuring their business is covered against accidents, claims, losses, and the responsibility of additional employees as they grow their business.
Source: Pixabay
Startup strategy of business growth
The blog of Paul Graham, entrepreneur and co-founder of the Y-Combinator, includes an article entitled Startup=Growth where he lists the three important growth phases of a startup:
- Initial period of slow or no growth, while the startup figures out what it is about and what it needs to do.
- A period of massive growth while developing a product that people want and connecting with them.
- Transforming from a startup to a big company, reaching market limits and innovating or diversifying where growth can slow.
These phases can be transferred to any startup and they highlight the different levels of attention and focus a new startup has.
The start of a startup: Individual responsibility branches out
In the beginning, entrepreneurs are on their own, free from the shackles of employers or restrictions in ideas and creativity. It can be a life-changing decision as business owners give wings to their ideas at a rapid pace. This can involve seeking external funding, finding the right first employees, and ensuring that adequate business cover is secured.
This is the time when it is critical for new business owners to cover the basics, like appropriate business cover against a potential claim. They may get small business insurance quotes for their business, which will mitigate against claims that could severely limit or curtail the business from getting off the ground. Business insurance is prudent for any new company but it can all too often then be forgotten about, especially as the company grows.
Source: Pixabay
A period of rapid growth: More employees, more customers, more risk
Successful entrepreneurial endeavors can happen quickly. For example, Netflix outmaneuvered Blockbuster to dominate the film subscription market almost overnight. Airbnb also found that when growth arrived, it did so with extraordinary pace and their business needed to adapt quickly. Employees will be attracted to the energetic vibe of new startups. However, more employees can mean a lot more personnel issues to deal with, potentially taking a business owner away from the core of their business.
This then means hiring more staff to cover HR, project management, IT and all the other areas of the business that needs full-time focus. At this point, business owners often forget to revisit their existing business insurance policies to ensure it is also developing alongside the business. Cover for an individual is a lot different from that of business of thirty or forty employees, making it an important time to reconsider the protection and cover in place.
Reaching the market limit: Innovate, diversify or sell
Once a business reaches its market cap, growth can slow down with hiring and investment also maintaining a level. At this point, many entrepreneurs explore what to do next, through innovation or diversifying their products, or even having an exit strategy. The shaving company Harry’s were in this same position before adding to their ergonomic razors with facial balms, creams, soaps and accompanying shower products.
Source: Pixabay
When companies diversify, it can produce a whole new set of liabilities and it is important that its business insurance has these changes to their liability covered. This includes both spatial requirements like additional real estate or premises in addition to covering stock damage in the event of fires, flooding or theft.
As a startup business grows it creates a different set of questions for entrepreneurs to answer. At the beginning of the journey, everything can be managed by a single person, but as more employees join it means more social responsibility. One of the biggest fundamental basics is ensuring the business has adequate insurance cover in line with its growth. Get it wrong and it can have devastating consequences for the business.
