It’s a fact that insurance and business growth are closely associated. However, the topic of insurance for startups or small business owners in Singapore, Hong Kong or China always brings conflicted interest.
It is viewed by many as an unnecessary expense – at least for the time being. On the other hand, some believe that rather than being a necessity, it is more important for peace of mind. Either way, it is important to consider it as a necessary investment to grow your business rather than just an ancillary cost.
Here are the reasons why insurance is important for your business:
1. Financial security for your clients
Insurance will not only bring security for running your day-to-day business, but it will also give your prospective clients the confidence to work with you. Insurance is a tool that allows smaller companies to compete against larger ones: it will secure your clients by giving your company the financial strength needed if something goes wrong.
Indeed, for large companies, one of the barriers of doing business with start-ups or SMEs is the insecurity: what if they fail to deliver? What if the product has a hidden default? For a large company, knowing that its business partner has the financial strength to manage an incident is a must, and proper insurance policies will deliver just that. Insurance companies can indeed issue a windfall, of an amount far higher than your actual business size, allowing your company and your prospective clients to get similar financial security as from a larger competitor.
2. Attracting investors
Institutional investors are obviously not risk-averse, but they always look at ways to reduce their risk exposure when making an investment. This is the reason why they do their due diligence. One way to convince potential investors to select your company is to show that your company has proper risk management in place.
Founders that understand insurance show a certain level of wisdom and foresight, two qualities that will be needed to grow an awesome idea into a successful business.
How does it work?
We have seen many cases where a startup company has been able to work with multinational companies because it was able to secure, through an insurance policy, enough guarantees for a multinational company to feel secured. Whether you sell a service or a product, covering the liability through a professional indemnity or a product liability insurance is a must for growing your business and dealing with larger clients.
If you have any questions about business insurance and how it can help you grow your business, please contact us at firstname.lastname@example.org.
To find out more about our various insurance solutions for SMEs, please visit our website.