I Should Have Listened To My Mother!

(Mentor Mama worked really hard on these posts.  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”.)

Hidden Risks in a Home-Based Internet Business

Well, My Dear Friends,  Mentor Mama promised that she would be back this week and here she is. . . ready to scare the pants off of you about all the risk at which you have placed yourself  by undertaking a home-based Internet business.

Soooooo, why am I smiling?   Laughing even?

My siblings would say it is because I am sadistic (Hey, c’mon. . . . It’s been forty years since I put those ants in your bed. . . .).  My mother would say that I love to be the bearer of bad news (Mom, REALLY!  I didn’t give you high blood pressure!  I just read you the results!).   My children would say that it is because I am weird (Well, there are elements of truth in everything).

In point of fact, it is for none of those reasons.  I am absolutely delighted to be able to bring you information that will heighten your awareness, lessen your risk, and perhaps even prevent the loss of your business.   Even though we are discussing unpleasant possibilities, we are discussing them in the context of  PREVENTION and PROTECTION.  This is GOOD NEWS!  You must stop avoiding these issues because you would rather focus on the positive, light-filled energy flowing through you and into the Twitterverse as you help others reach their full spiritual and personal potential and discover an amazing new keyword.

With all due respest to having a positive outlook, and being an optimist,   people who use those traits as an excuse to ignore the realities of life and who  fail to plan for risk and loss will be the ones wailing and gnashing their teeth, crying out, “Why MEEEEEE???”

If you want to run a serious business that does not collaspe like a house of cards take note of the following Hidden Risks and discuss them with your Insurance Professional.

1.   Your home-based business is not covered by the typical homeowner’s policy. While a good policy may cover the loss of a SMALL  portion of your business assets, policies today have very specific limits for loss of computers.  In addition, it most likely does not cover any liability related to the operation of  a business in your home.  You may well wonder what you have in your business that is valuable, especially if you work on the Internet.

What  would it cost  to replace your desktop, laptop, printer, scanner, microphone, headsets, backup hard drive, business related books, DVD sets of expensive courses, iphones, software and ??????  You might need to double the total if there are two marketers in the household.  Add to that the cost of any inventory, samples or promotional materials you store at home and we are talking some pretty hefty losses.  You acquired many of these things slowly, over a long period of time, so it is easy to forget that having to replace everything at once could be challenging if not impossible.

Then there is liability.  Think,  “Computer Tech slips and falls while repairing your business computer.”  Think,”One of your customers becomes ill from a tainted batch of protein powder that you market.”   STOP.  Don’t say anything.  Don’t try to argue this with me.  You do not have to be at fault to be sued.  At fault or otherwise, it costs money to defend a lawsuit.  Saavy business people buy insurance.

A skilled Insurance Agent or Broker can assist you in a risk assessment and discuss the types of coverage suitable to your business.  Be sure to inquire about additional coverage for your computers.   Typically the coverage for home-based businesses falls into three general categories:

A)   An endorsement to your homeowner’s policy - Great option, but usually limited coverage.

B)   An independent policy designed for a home-based business – More extensive coverage.  A good policy may cover loss of income due to property damage as well as loss of valuable papers and accounts receivable.  More recently, policies are covering loss of income due to your site being hacked.

C)  A Business Owner’s Package Policy - The broadest form of coverage, but this generally covers brick and mortar businesses with multiple locations.

2.    Marketing on the Internet exposes you to a wide-range of copyright and trademark laws. While inadvertent violations of these laws has always been possible with print, radio, and television marketing, there is often a marketing and/or legal department for the station and publisher.  The company hosting the content scrutinizes it for these violations, for which they might be held liable as well.  Now, with self hosted web-sites and blogs, you are not running your content by any professional that can give you feedback.  Simultaneously, the ability of the owners of the copyright or trademark to seek out violations has increased exponentially due to the use of search engines.  Some companies have entire departments that do nothing but search for violations.

3.  Interacting with readers on your blog and collecting their personal information raises privacy issues. Never before have marketers had such immediate access to a demographic that readily provides personal information.  Are there laws about this?  Do you know what they are?  Do you know exactly how to implement them?  What happens if you make a mistake?  What if your computer is hacked and the private information is stolen?  What is your liability?

4.  When a company is sued (i.e. for deceptive advertising practices) and you are an affiliate with a banner ad, you will probably be sued as well, especially if the Plaintiff clicked on your affiliate link to buy the product.  By publishing their banner you become linked to their practices, even if you had no knowledge.  Although you will most likely not be found liable, it will cost a lot of money to untangle yourself from their legal mess.

The risks described in Items 2-4 above are relatively new.   As more and more people venture into this exciting online world the extent of the risks and responsibilities of marketers will continue to evolve.  The currently understood issues are already many, diverse, and deadly.  If you have not sought the help of of your Insurance Professional and specifically asked for coverage relating to your internet activities, you are leaving yourself wide-open to the whims of fate.

Can you afford this kind of coverage?  According to my personal Insurance Broker, Betty Duke, of  Blue Ribbon Insurance, the rates are much more affordable than you might think.  The rates will, of course, vary based on the type of business in which you engage, the advertising practices that you choose, your relationship to the product (creator, affiliate, associate, etc.),  and many other issues, some of which are still unknown.  Your concerted efforts to minimize the risk by implementing generallyaccepted principles and practices and seeking compliance advice from professionals in this area, such as an Internet lawyer, will help an insurance underwriter better manage your premiums.

Did Mentor Mama scare your pants off?  I hope so, because these are serious issues that MUST, MUST, MUST be addressed.  If this sounds like a lot of work, too much hassle, not what you signed up for. . . then go back to your J-O-B where real entrepreneurs address these issues for their own business, and all you have to do is your designated assignment.   As Internet Marketers, it is time to GROW UP.   Writing blog posts and chatting on Facebook does not make you an entrepreneur.  Just like life, your business comes with a wide range of responsibilities.

Assessing and managing your risk and taking action such as conferring with an Insurance Professional will allow you to get back in your britches and put a smile on your face.  In fact, you will feel so great that the two of us can have a good laugh!

*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.

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