114 | HOW TO WRITE A BUSINESS PLAN
RELATED TOPiC
For more help, look ahead to Chapter- In that chapter, you’ll write a detailed
marketing plan for your business that includes
both preopening promotions and continuing
marketing costs.
4e. insurance. You must have at least some
insurance in this litigation-happy society.
Your lease may require you to keep fire,
flood, or earthquake insurance on the
building. If the public comes into your
business, public liability and property
damage insurance is a necessity. This
will protect you from the person who
slips and falls on your floor mat. If
you employ anyone, you also need
workers’ compensation insurance, since
you are absolutely liable if one of your
employees injures herself while at work.
You will probably also want to carry
insurance on your valuable inventory
and fixtures. And if you manufacture
any product that could possibly harm
anyone, such as food or machinery, you
will want to consider product liability
insurance.
Talk to an independent insurance
broker who specializes in business
insurance to get an idea of what
coverage you’ll need and how much it
will cost. Then shop around warily. Lots
of over-enthusiastic insurance people
will try to sell you far more insurance
than you need. Although you need some
insurance to protect against obvious
risks, you don’t need to starve to death
trying to raise enough to pay your
premiums.CAUTiON
Some people try to avoid the
responsibility of paying workers’ compensation
insurance or payroll taxes by calling their
employees “independent contractors.” This can
cause serious problems with back taxes if the
IRS rules against you. Also, if the independent
contractor is injured while working for you,
the workers’ compensation appeals board will
almost always rule in favor of the employee
and against independent contractor status,
unless your worker genuinely has her own
business. This means you may end up paying
huge sums if one of your workers becomes
disabled while you don’t have insurance. In
other words, trying to save a few pennies on
this insurance is just not worth the risk.Once you arrive at a good estimate
for your total insurance bill, inquire
about deferred payment programs. Most
companies that offer them often require
that you pay 20% of the total premium
up front each year and the balance in
ten payments. For purposes of your
Profit and Loss Forecast, divide the total
annual insurance payment by 12 and
enter those figures.
4f. Accounting/Books. You can do your own
books if you like working with numbers.
Chances are, however, you’ll be so busy
with the business, you won’t have time.
One good approach is to budget for a
CPA to set up your books initially and