I Should Have Listened To My Mother!

(Mentor Mama has been working really hard on this post.  In doing so, she realized that she could not adequately cover the topic in only one post.  Therefore, Part 3:  Insurance Professionals, will be brought to you in Parts A and B.  Part A is an “Introduction to Risk Management”.  Part B will be “Hidden Risks in a Home-Based Internet Business”.)

INTRODUCTION TO RISK MANAGEMENT*

Ok, let’s get down to brass tacks.

We have been chatting for a while about the importance of running your business like a business. . . Why you need an accountant, a banker. . . blah, blah, blah.  Today, I would like to ask you,  DO YOU LOVE YOUR FAMILY? Yes, you heard Mentor Mama correctly.  Do you love your family?  Really LOVE your family?  Also, do you love/respect/care about yourself and your future?

Do these seem like odd questions?  “Of course I love my family,” say you.  “Of course I care about my future,” say you.  What is my point then?

Love requires more than just love.

Love for your family and even for yourself requires action.  To be truly loving (excepting special circumstances of physical or mental disability), you must also provide for your family.  That means generating money, providing food and shelter, caring for yourself and any members of your family (pets count too).  It also includes promoting good mental and physical health and growing spiritually.  ACTION.  Love requires action.

There are many other activities that I could add to this list, but Mentor Mama hopes that you get the point.  If you really love your family and yourself, you are charged with many responsibilities.  Among them is the need to reduce the risk of harm coming to your family.  You make sure that you live in a sturdy dwelling, that the water is drinkable, that the furnace works and so on.

Sadly, not all risk can be managed by having your car repaired or going for an annual check up to the doctor.  Accidents and misfortunes occur, even to good people.  It is part of life.  In our modern society, we have a way of handling that risk that can serve to minimize the harm caused by such events.

You know where I’m headed:  Insurance.

We all think that we know what insurance is, but let’s take a look at this a little differently.  I recently ran across the following quote:

“Insurance is one tool available . . . as part of a larger program of risk management.  Risk management also includes analysis of risk, correction of circumstances that increase risk, and a willingness to assume an appropriate level of risk.  Risk management extends to the investigation and handling of events that might be covered under an insurance policy.”  www.gosmallbiz.com

I’m guessing that the average person doesn’t think of conducting her life with an eye towards “risk management”, although we all do in one way or another.  We install smoke detectors, brush our teeth, and buy bandages all in an effort to control or minimize potential damage.  People buy health insurance and life insurance.**  Professionals buy malpractice insurance.

Have you considered that there are risks to running your home-based business?  Have you considered that there are risks in an Internet-based business?

IF YOU TRULY LOVE YOUR FAMILY and IF YOU TRULY CARE ABOUT YOUR FUTURE you must take ACTION and consider the risks involved in running your business.**

The person best able to assist you in this task is a reputable Insurance Professional* who works with home-based businesses and Internet businesses specifically.   This may be your Agent that you have been working with for years.  It may not.  Many companies are not yet up to speed what the cyber world and their agents are not trained to help you in the Internet arena.  So, SHOP AROUND.  Sometimes using an Insurance Broker versus an Agent allows you the flexibility to shop around with one person.  Typically, a broker can sell policies from many different companies, whereas an Agent works for one specific company.

Today, I am going to provide you with a brief overview of risk management,  that will allow you to be more aware of the issues that you need to discuss with an insurance provider.

WHAT IS RISK MANAGEMENT?  This is the process of determining the level of risk that your business poses in all areas and planning how you will handle that risk.

Part 1. Assessing Your Risk. Everything we do in business poses some kind of risk.  It is necessary to walk through your business as a client  or outsider would, assessing each point of contact and determining what the risks are in that context.  Could a customer be harmed by a product that you sell?  Does your use of a photograph off of the Internet violate the copyright of the photographer?  Could a coaching client be kicked off of Google because they took your advice?  Be brutal with yourself.  Remember that you don’t need to be wrong to be sued.  We are assessing areas of risk, not laying blame.

Part 2. Assuming the Risk. After careful analysis of the risks involved and what the potential costs will be (finances, reputation and emotions), some risks are worth taking.  Perhaps the cost to you would be very small or the risk is very remote.  Perhaps you cannot afford insurance immediately and you have no choice but to assume the risk.

Part 3. Addressing the Cause. There are certain risks that can be significantly reduced or eliminated by taking concrete steps.  Have your sales funnels reviewed by an attorney for FTC compliance.  Stop advising coaching clients to engage in risky marketing techniques, no matter how much fun they are.  Investigate a company carefully before you jump into being an affiliate.  Stop using music or photos on your blog, unless they are royalty free.

Part 4.    Shifting the Risk to Others. Some activities may be better handled by third parties.  If you are a Social Media Marketer, you might want to refer your coaching clients to someone else for their SEO or Pay-per-Click needs.  If you need an assistant, you could let him work out of his own home rather than coming to your home office, where there is risk of injury.

Part 5.  Providing for the Risk Yourself. Some small risks can be provided for by building a private fund to cover them.  The risks would have to be small and predictable in order to make this work.

Part 6.  Purchasing Insurance. Once you have completed Parts 1-5, attempting to manage and reduce your risk, it is time to get serious about  purchasing Insurance to cover your home-based business and your Internet activities.

NEXT WEEK, MENTOR MAMA  WILL COVER SOME OF THE HIDDEN RISKS IN OPERATING AN ON-LINE, HOME-BASED BUSINESS AND EXPLAIN SOME OF THE TYPES OF COVERAGE YOU WILL WANT TO DISCUSS WITH YOUR INSURANCE PROVIDER.

So pour yourself a drink ; ) and be ready to discuss how you can demonstrate your love to yourself and your family by safeguarding your futures against serious risk.

*DISCLAIMER: This article is meant for information and discussion purposes only.  It is not intended to be comprehensive.  Further, this article is not intended in any way to be construed as insurance, legal, accounting, or other professional advice.  Every situation is different.  For decisive information about any of these topics, seek out the appropriate professional, who can represent your specific interests and needs.

** For purposes of this blog, I will not be discussing the issues of health insurance or life insurance.  Those are related and equally important topics that we can discuss in the future.

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