Running a small business involves a significant investment. Business insurance protects your investment by minimizing financial risks associated with unexpected events such as a death of a partner, an injured employee, a lawsuit or a natural disaster.

Unless you are an employer, business insurance generally is not required by law. Still, it is common practice to purchase enough insurance to cover your assets. If your business is an LLC or a corporation, your personal assets are protected from business liabilities; however, neither business structure is a substitute for liability insurance, which covers your business from losses.

State governments determine insurance requirements for businesses. Ohio requires businesses with employees to pay for workers’ compensation insurance and unemployment insurance.

Also check for required insurance of specific business activities. For example, if you own a car or truck and use it for business purposes, you may be required to purchase commercial auto insurance. Finally, your financial lender or investors may require you to maintain life, business interruption, fire, flood or other types of insurance to protect their investments.

Types of business insurance

Insurance coverage is available for every conceivable risk your business might face. Cost and amount of coverage of policies vary among insurers. Discuss your specific business risks and the types of insurance available with your insurance agent or broker. Your agency can advise you on the exact types of insurance you should consider purchasing, such as:

General liability insurance. Covers legal hassles due to accident, injuries and claims of negligence. These policies protect against payments as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.

Product liability insurance. Companies that manufacture, wholesale, distribute and retail a product may be liable for its safety. Product liability insurance protects against financial loss as result of a defect product that cause injury or harm. The amount of insurance you should purchase depends on the products you sell or manufacture. A clothing store would have far less risk than a small appliance store, for example.

Professional liability insurance. Liability coverage that protects your business against malpractice, errors and negligence in provision of services to your customers.

Depending on your profession, you may be required to carry such a policy. For example, physicians are required to purchase malpractice insurance as condition of practicing.

Commercial property insurance. Covers everything related to the loss and damage of company property due to a variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism. The definition of “property” is broad and includes lost income, business interruption, buildings, computers, company papers and money.

Policies come in two basic forms:

• All-risk policies covering a wide range of incidents and perils except those noted in the policy.
• Peril-specific policies that cover losses from only those perils listed.

Examples of peril-specific policies include fire, flood, crime and business interruption insurance. All-risk policies generally covers risk faced by the average small business, while peril-specific policies usually are purchased when there is high risk of peril in a certain area. Consult your insurance agent or broker about the best type of business property insurance.

Home-based business insurance. Contrary to popular belief, homeowners’ insurance policies generally do not cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners’ policy to cover normal business risks such as property damage. Homeowners policies only go so far in covering home-based businesses, however, and you may need to purchase additional policies to cover other risks, such as general and professional liability.

— Courtesy of business.gov

	Working the morning concession table at the 2009 Mentor Area Chamber of Commerce golf outing are, from left to right, Donna Lexa and Pat DeLaney of Lake National Bank and Susan Kilroy, chamber volunteer. Photo courtesy of Skip Trombetti of Van's Photo.

Before YouTube, Facebook and Twitter entered the lexicon of social media and networking, non-profit organizations entertained members and sponsors using a tried and true approach: face-to-face interaction. The primary function that helped to serve the dual purpose of generating revenue and providing a networking opportunity was a golf outing.

Golf outings remain a popular, yet viable, means for non-profit organizations to put clients together in a fun, non-threatening environment. While many business deals are consummated on the golf course, a round of 18 holes followed by dinner can often tee up potential business.

“Without a doubt, our golf outing is our largest non-dues income generator,” says Marie S. Pucak, executive director of the Mentor Area Chamber of Commerce.

“We have learned at our industry conferences that if you are doing an event like a golf outing, which is very labor intensive, that you find a way to make a good net income from it. Sponsors are key to the success of our event.”

As for social benefits of an outing, Pucak says the sky is the limit. The Mentor Chamber, which holds its outing July 16 at St. Denis Golf Course in Chardon, engages sponsors on many levels. If hole sponsors wish to attend the outing and talk with the foursomes as they play, that is a welcome aspect of the event.

“Our sponsors get very creative,” Pucak says. “Charter One plays a hand of blackjack with each foursome, with the winners receiving a prize. Lisa Nelson of Right Track Benefits usually has some unique golfer-only raffle.”

The Euclid Chamber of Commerce is trying a novel idea for its golf outing this year. It’s teaming up with the Western Lake County Area Chamber of Commerce to host a combined outing July 29 at Pine Ridge Country Club in Wickliffe.

“Last year was the first year I was involved in the outing,” says Sheila Gibbons, the Euclid Chamber’s interim executive director. “We usually had an outing outside of the area and one at Briardale Greens Golf Course.”

The Euclid Chamber believes a combined outing will provide greater networking opportunities for its membership and greater visibility for its sponsors.

Proceeds go a long way

Erna M. Leagan-Mabel, executive secretary of the Chardon Area Chamber of Commerce, agrees with Pucak that the chamber’s golf outing is extremely vital to its overall operations even if it is not the organization’s largest fund-raiser of the year. The outing itself generates between $5,000 and $6,000 annually, Leagan-Mabel says.

The Chardon Chamber will host its annual golf outing June 18 at Chardon Lakes Golf Course.

“(The golf outing) is definitely a great networking opportunity,” she says. “The golfers really like the course, and the dinner is fantastic. We generally get around 100 golfers. Unfortunately, last year’s economy made it difficult to get people out, so we only had 50 golfers. We are hopeful that our turnout will be better this year.”

Funds raised from the outing, as well as through other fund-raising events, not only cover the chamber’s day-to-day expenses, but they also allow the chamber to continue awarding scholarships to Chardon High School graduates. The chamber has awarded more than $15,000 in scholarships the past four years, Leagan-Mabel says.

Extracurricular fun

To enhance networking opportunities, the Mentor Chamber uses several fun, interactive side events during the outing. A putting contest is conducted yearly with a putt off after play concludes. The prizes vary each year, but Roll-Kraft donated a $500 gas card one year, Pucak says.

Food and drink play equally important roles in creating a fun, socializing atmosphere. “We have gourmet bag lunches on each cart from J’s Pizza Market, hot dogs grilled fresh at the turn, and snacks and beverages all along the course,” she says.

“Sponsors have given away frozen candy bars, ice cream sandwiches, fresh fruit cups and even cigars, both candy ones and the real deal.”

Chamber members and sponsors continue to network into the evening while enjoying dinner and the chance to win door prizes.

Big Brothers Big Sisters of Northeast Ohio is another non-profit organization that uses a golf outing as a revenue generator and a networking opportunity. The Big Brothers Big Sisters Charity Golf classic, which will be June 15 at Little Mountain Country Club in Concord Township, provides the perfect opportunity for sponsors and supporters to raise funds that support mentoring programs for local children.

Businesses also benefit

Despite the constraints of an economy on the rebound, golf outings continue to be a prime source for non-profits to create income while allowing members and sponsor the chance to meet and mingle. Most non-profit executives will agree that a golf outing is a tasteful way to prominently promote their business to a current and prospective customer base, as well as to make money for their organization.

“There are significant benefits socially for a group to hold a golf outing,” says Alyssa Moore, who handles marketing and public relations for Crossroads, which sponsors several golf outings a year. “The foursomes really have time to team, build and develop a relationship. This is helpful in creating a team atmosphere among co-workers. It is also an opportunity to network with some very specific contacts you may not get to meet with otherwise.”

Ron Hollowell is a Hambden Township-based freelance writer who covers Geauga County for the Business Journal.

Deadline June 20 for drug-free safety program

BWC’s Board of Directors voted at its March meeting to adopt the new Drug-Free Safety Program (DFSP) to promote the health of Ohio’s work force and to prevent workplace injuries attributed to the use or abuse of alcohol and drugs.

BWC created the DFSP as a result of the recommendations of the recent comprehensive study of Ohio’s workers’ compensation system, programs and services. The new program becomes effective July 1 for private employers and Jan. 1 for public employers.

DFSP features a streamlined focus on safety and offers improved measurement and evaluation tools to maintain effectiveness In addition, it:

• Extends eligibility to more employers;
• Eliminates the current program’s participation limit of five years;
• Is available to group-rated employers and employers who maxed out of the current program; and
• Provides premium discounts from 3 percent to 7 percent.

The new program is expected to be easier to understand and implement, more actuarially sound and more effective. DFSP relies upon better integration of an employer’s drug-free efforts with its comprehensive workplace safety program. DFSP offers a premium discount to eligible employers for implementing a loss-prevention strategy addressing workplace use and misuse of alcohol and other drugs, including prescription, over-the-counter and illegal drug abuse within the context of a holistic safety program. It is designed to more effectively prevent injuries and illness by integrating drug free into each company’s comprehensive safety management system.

DFSP is a voluntary program that encourages employers to detect and deter substance use and misuse, and take appropriate corrective action within the context of addressing overall workplace safety. The most obvious change is the emphasis on tailored approaches to loss prevention and risk management. This includes conducting a safety review, providing accident-analysis training for supervisors, submitting accident reports and designing a safety action plan to improve the company’s safety systems.

If participating in the current program for the July 1, 2009, program year, complete the new Application for Drug-Free Safety Program (U-140) to participate in the new program.

For more information, visit www.ohiobwc.com and click on “new drug-free program.”

Small business optimism declines
Uncertainty, low sales keep companies on sidelines

The National Federation of Independent Business Index of Small Business Optimism lost 1.2 points in March, falling to 86.8. The persistence of index readings below 90 is unprecedented in survey history.

“The March reading is very low and headed in the wrong direction,” said Bill Dunkelberg, NFIB chief economist. “Something isn’t sitting well with small-business owners. Poor sales and uncertainty continue to overwhelm any other good news about the economy.”

The index has posted 18 consecutive monthly readings below 90. In March, nine of the 10 Index components fell or were unchanged from February’s not-so-great readings.

Employment

After a devastating period of employment reductions, employment change per firm hit the “zero line” in March. Since July 2008, employment per firm fell steadily each quarter, logging the largest reductions in survey history (35 years). The February reduction of just 0.1 per firm indicated a substantial slowdown in the bleeding, and the March reading of 0.0 confirms that workforce reductions have ended.

“This sets the stage for job creation – if owners become optimistic enough to think new hires can generate enough additional business to pay their way,” Dunkelberg said.

While actual job reductions may have halted, plans to create jobs remain weak. Over the next three months, 7 percent plan to reduce employment (down one point), and 15 percent plan to create new jobs (up two points), yielding a seasonally adjusted net negative 2 percent of owners planning to create jobs, weaker than February and still more firms planning to cut jobs than planning to add. Only 9 percent (seasonally adjusted) reported unfilled job openings, down two points and historically low, showing little hope for a lower unemployment rate.

Capital spending

The frequency of reported capital outlays over the past six months fell two points to 45 percent of all firms, one point above the 35-year record low reached most recently in December. Of those making expenditures, 30 percent reported spending on new equipment (down one point from February), 16 percent acquired vehicles (down three points), and 8 percent improved or expanded facilities (down two points). Four percent acquired new buildings or land for expansion (unchanged), and 9 percent spent money for new fixtures and furniture (up one point). Plans to make capital expenditures over the next few months fell one point to 19 percent, three points above the 35-year record low.

“With all the good news about the economy and GDP growth, it is not immediately obvious why owners remain so pessimistic and unwilling to commit to new spending,” Dunkelberg said.

Sales and inventories

The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past three months improved 1 point to a net negative 25 percent. Widespread price cutting continued to contribute to reports of lower nominal sales. The net percent of owners expecting real sales gains lost three points, falling to a net negative 3 percent of all owners, seasonally adjusted.

Small-business owners continued to liquidate inventories, and weak sales trends gave little reason to order new stock. A net negative 18 percent of all owners reported gains in inventories (more firms cut stocks than added to them, seasonally adjusted), 10 points better than December’s record reading, but unchanged from February.

Inflation

The weak economy continued to put downward pressure on prices. Eleven percent of the owners reported raising average selling prices, but 29 percent reported average price reductions. On the cost side, 5 percent of owners cited inflation as their No. 1 problem (e.g., costs coming in the back door of the business), so materials costs are not pressuring owners too badly.

Earnings

In March, earnings trends declined with a net negative 43 percent of owners reporting positive profit trends. The persistence of this imbalance is bad news for the small-business community. Profits are important for the support of capital spending. Not seasonally adjusted, 9 percent reported profits higher (down 3 points), but 58 percent reported profits falling (up three points).

“Don’t expect much spending or hiring until these trends reverse,” Dunkelberg said.

Credit

Regular NFIB borrowers (35 percent accessing capital markets at least once a quarter) continued to report difficulties in arranging credit. A net 15 percent reported loans harder to get than in their last attempt, up three points from February. However, 89 percent of the owners reported all their credit needs met or they did not want to borrow. Historically weak plans to make capital expenditures, to add to inventory and to expand operations also make it clear that many borrowers are simply on the sidelines, waiting for a good reason to make capital outlays and order inventory that requires businesses to take out the usual loans used to support these activities.

“What small businesses need most are increased sales, giving them a reason to hire and make capital expenditures and borrow to support those activities,” Dunkelberg said.