Small and medium-sized enterprises (SMEs) may have the ability to grow quickly. A retail store, for instance, may find that if its product line is successful, its customer base will expand and its demands will grow.
Property, new products, investments in infrastructure or creating a digital strategy, all these things can be the next step for an SME, and due to size, they could find expansion an option sooner rather than later.
This is obviously great news – these early steps are essential for making a profitable and successful business. However, the risks are likely to change and it’s important for an SME owner to discuss this with their insurance broker.
In its second annual SME survey, global insurance group Zurich found that many Australian businesses were looking to diversify their range of products or services.
In fact, the number of SMEs rating this diversification as a means to improve revenue and profit growth increased 4 percentage points since last year’s survey.
While this can be seen as positive news, Zurich Commercial Portfolio Management Head James Makin said businesses looking at other growth avenues should be aware of the importance of business insurance.
“If a business plans to move into new areas in which it is not an expert, such as seeking out new customer groups or providing new products or services, it should ensure that it has adequate insurance in areas such as public and product liability,” he explained in a report by Insurance & Risk Professional.
While some businesses may be diversifying to expand, others may be doing so to reduce costs. These business owners will not want to risk losing more through incorrect insurance coverage.
“A business wanting to reduce costs may be trying to do what it used to do but with less staff and resources,” Mr Makin continued. “In such an environment, where corners are being cut, accidents and mistakes are more likely to happen.
“Again, adequate insurance becomes critical to protecting the business.”
Is your business diversifying, expanding or contracting? Discuss this with your insurance broker and protect it today.