3 Scenarios That’ll Financially Cripple Your Business (And How They Can Be Avoided)

You didn’t start your small business just to watch it fail. You started your small business in pursuit of accomplishing a very personal and specific goal. Whether you sell products with a fraction of the proceeds donated to your favorite charity or you offer advice services to people in your neighborhood, you know that in order to help your community thrive, your business has to thrive too.

One way to make sure that your business stays in business is by investing in business insurance. Are you wondering, *[how much does business insurance cost?](https://coverhound.com/business-insurance)* or *how does business insurance protect my business?* You’ll get your answers and more when you read about the three following scenarios. For the small business owners who lost their business when faced with these issues, you can bet they wished they had had business insurance to back them up and keep them going.

**Scenario 1: The Neighborhood declares your business a ‘public nuisance’**
Your community has cause to list your business as a [public nuisance](http://blogs.findlaw.com/free_enterprise/2014/07/5-big-mistakes-that-can-shut-down-your-business.html) if your business operations have negative effects on the safety, welfare and health of the public. In [July 2016](http://www.wlwt.com/article/prosecutor-two-norwood-businesses-shut-down-as-nuisances/3568084), two businesses (Sherman Market and Donna’s Carry-Out) in Norwood, Ohio were shut down after being declared a public nuisance by their community. Both businesses had the police called to their establishments over 150 times: Sherman Market a total of 217 times, and Donna’s Carry-Out a total of 153 times. The calls were for disturbances including theft, fighting, drug use, drug distribution and a shooting. The county prosecutor said it was “a good day for Norwood. Two businesses that caused nothing but trouble for the law-abiding citizens in the community have been shut down. Norwood citizens constantly complained about these businesses.”

If your business should be declared a public nuisance and get hit with a lawsuit shutting down your establishment until you right the situation, business interruption insurance will cover your and your employees’ lost wages until you are able to open your doors again.

**Scenario 2: Failure to delegate responsibility among staff**
Because your business is your “baby,” you might have a hard time [delegating responsibility](http://www.bankrate.com/finance/personal-finance/10-mistakes-that-can-cost-you-your-business.aspx) to your staff. But in wanting everything to be just right, you will in effect create an apathetic to negative space within your company. How so? Your employees will feel that they are being treated like children and are being unfairly judged for a job performance you have not let them actually pursue and do. You can only grow your business if you help your employees to grow. If you experience a high turnover rate at your business, business interruption insurance will again help to cover some of the financial burden and keep your business afloat. But if you do not take the initiative and train your staff to be a group of self-sufficient and poised employees, your business won’t last long.

**Scenario 3: Failure to take cybersecurity seriously**
Did you know that [60 percent](http://www.cnbc.com/2014/07/30/11-all-too-common-reasons-small-businesses-fail.html?slide=9) of small businesses fail after they come under a cyberattack? Cybercriminals don’t just target big name companies anymore—there is no discrimination. The results of a cyberattack include business hours shut downs, service interruptions and the gargantuan cost of trying to get all of your stolen data back, if it hasn’t already been disseminated or destroyed. Did you also know that companies hit by a cyberattack usually suffer a major hit to their reputation? [Cybersecurity matters](https://cyberpolicy.com/), and if your customers believe that you did not do everything you could to protect their private information, they will leave you.

Now that you’ve learned what can happen if you don’t have business insurance, it’s best to get a policy before disaster strikes. [Get](https://coverhound.com/business-insurance) your free business insurance quote with CoverHound today!