One of the most important things in business is knowing when to scale up. Across the globe, many businesses make the mistake of scaling up too quickly – pouring resources into expansion before they have a solidified foundation. On the other hand, there are plenty of businesses that leave their scale-up project too late, missing key opportunities for growth and allowing their competitors to get ahead. As a business owner, you need to know precisely when you’re going to scale up, and not only this: make sure that every part of your business scales up with you.
The Scale Up Slip Up
Yes, scaling up too early or too late can be detrimental to a business, but perhaps even more than this, scaling up without updating your processes or safeguards can be particularly damaging. There are many companies out there, for instance, that will have a strong scaling strategy, complete with financial projections and market expansion plans. But they forget one thing: insurance. Even if you already have insurance policies in place, if your business is going to get bigger, you need to be ready to reassess and update your coverage to reflect all the new risks, assets, and operations.
When to Update Your Insurance Coverage
In terms of when you should update your coverage, it depends mainly on the industry you’re in and the new risks you’ll be facing. If you’re in the construction industry, for instance, taking on larger projects or operating in new locations might require higher levels of public liability insurance, while for companies in the e-commerce space, scaling might mean handling more customer data – making an update of your cyber insurance crucial.
Organizations like Next Insurance allow you to shop by profession, choosing from a list of over 1,300 businesses to find the right coverage, so this should make it easier to tailor your updated coverage and make sure you’re addressing the specific needs of your industry.
Why You Should Update Your Insurance
Of course, if you already have all the necessary safeguards in place, you might be wondering why you would take time and spend extra on updating your coverage and expanding your insurance policies. As we mentioned before, however, as your business grows, so do the risks you face.
According to a recent study, as many as 75% of all US businesses are underinsured, which is an even more worrying statistic when you consider that 99.9% of those businesses are SMEs. If 75% are already underinsured as an SME, by the time they scale up, the gap in coverage is going to become even more significant – undoubtedly exposing them to greater financial, legal, and operational risks. It’s your job, then, to reassess your insurance as you develop and adjust it to reflect the evolving scale and complexity of the organisation.
It doesn’t even have to be complicated. When you’re scaling up, you might find that a lot of the risks remain the same, but the fallout of those risks can be even more damaging. Let’s say you’re running a commercial store and a customer slips and injures themselves while shopping. As a small business, the potential for a claim might have been manageable with your current public liability insurance. But if your store has grown – or you’ve relocated to larger amenities – then you’re likely to attract more customers, which means the risk of accidents – and the cost of a claim – will grow alongside you.
Without updating your coverage, you could quickly find that your existing policies no longer provide the level of protection that you need, and with the costs associated with a lawsuit or medical bills only getting higher, this could potentially cripple your larger business if you don’t have the proper insurance in place. By reassessing your policies and adjusting them to reflect your growth, you’re not just protecting yourself from what’s already happening – you’re safeguarding against all the risks of the future.
