molina anvil: RISK MANAGEMENT 101

When I think about personal financial planning, I break it down into three categories: risk management, wealth accumulation, and wealth distribution.? I consider it to be an unofficial lifecycle for planning.? You start off by protecting the risk of anything happening to you through acquiring the proper insurance and developing a feasible savings strategy which puts you in a position where you can begin to accumulate wealth.? Once you?ve accumulated that wealth through investments, savings strategies, and retirement planning, we figure out the most tax efficient ways to distribute that wealth and pass it onto the next generation for them to start the lifecycle all over again.

Financial planning for your business is no different but the rather daunting question of ?where do I begin?? sometimes prevents business owners from doing anything at all.? Or you may fall into the category of people who understand that you need a plan but feel that you don?t have enough money to start one.? Well, I am going to reveal three easy things that you can do to jumpstart the unofficial planning lifecycle through risk management.? These things will allow you to protect your business long-term but wont break the bank now:

1.?First things first, you absolutely must protect the business from inevitable liabilities.? Depending on the type of business you have, there may be several variations of business liability insurance that make sense for you.? However, general liability insurance is always a good place to start.? Business owners purchase general liability insurance to cover legal hassles due to accident, injuries and claims of negligence.? Other basic types include: product liability insurance for companies that manufacture, wholesale, distribute, and retail a product. Professional liability insurance is for business owners who provide a service. This type of liability coverage protects your business against malpractice, errors, and negligence in provision of services to your customers.? And lastly, commercial property insurance covers everything related to the loss and damage of company property due to a wide-variety of events such as fire, smoke, wind and hailstorms, civil disobedience and vandalism.

2. The next suggestion is something that you probably have never thought about: disability.? Disability insurance is often forgotten about in financial plans.? We understand the concept of owning home, auto, and health insurance but for some reason, when it comes to protecting our most valuable asset, our income, we don?t have the same zeal.? For the young business owner, there are two types of disability insurance that work together to protect you from an illness or injury that prevents you from being able to work for an extended period of time or indefinitely.? The first is disability income protection insurance that replaces the vast majority, typically around 85%, of your income in the event of a long-term illness or injury.? Secondly, disability overhead expense insurance protects your business? ability to cover ongoing overhead expenses and help ensure your business can keep going when you?re disabled.

3. ?Even when you?re just starting out as a young entrepreneur, it is crucial for you to think about what the future holds for your business.? Is it a short-term investment where you want to build, grow and sell the business within 10 years? Or do you want to retire from your business and pass it down for generations to come?? Whatever the case may be, business life insurance can be a simple funding vehicle that is relatively easy to acquire. ? Business owned life insurance could be purchased on the life of the owner and/or key employees so that the company would receive a lump sum to cover any loss sustained as a result of their deaths.

So as you can see, there are some very simple things that can be done very early in your career as an entrepreneur that will protect and add value to your business.? These different types of insurance all work together to better position you for success because they allow you to transfer your many risks from yourself to the insurance company.? When you know that your risks are taken care of, you can truly focus on building your business into a profitable enterprise.

For general questions or more information on how to create a financial plan for yourself or your business, please feel free to contact me.

Kathryn Epps
215.863.1055?
kathryn@event-chic.com