Savvy tips for setting up – and protecting – your small business

(BPT) - Baker Miriam Vilchez always dreamed of creating a business, spending hours perfecting her baking skills even while working full time. To get feedback on her business idea, she brought a freshly baked cake to her local State Farm agent, Cristel Noel. Noel was impressed by the cake's flavor and presentation, and discussed the plans Vilchez had for her business — and how her insurance needs as a small business owner would change.

Unfortunately, just as her plans were coming together, Vilchez was laid off from her full-time position due to the pandemic. She had to take several part-time jobs, putting her dream on hold. But she didn’t want to wait much longer. Determined to turn her passion into a business, Vilchez contacted Noel about what she would need to do to start her bakery from home.

“Cristel and her team have always taken the time to understand my needs and my situation so they can present insurance options for my specific plans,” said Vilchez. “I appreciate and value that kind of commitment.”

From opening day, Vilchez has baked cakes for birthdays, holidays and other events. She gained referrals from loyal customers, and her business has blossomed. In 2021, she was able to buy more equipment, allowing her to bake at a higher capacity. Today she works full-time creating her beautiful cakes.

If you dream of starting a business, you are not alone. According to the Census Bureau, over 4.4 million new businesses were created in the U.S. in 2020 — the highest on record, with half a million new businesses begun in January 2021 alone. As a result, State Farm has experienced a 30% increase in home-based business insurance policies in the past two years.

Whether you're still planning, or you already own a small or medium-sized business, here are tips to help ensure that your business will grow and thrive.

Develop a plan.

No business can get off the ground, get financing, or grow without a solid business plan. Creating a good business plan — and adapting it as needed — takes research, and assistance from others. One great resource for all things small business, including writing business plans, is the Small Business Administration.

Make it official.

Every state has different regulations regarding starting and operating businesses. Because such regulations involve legal and tax issues, you'll need expert advisors to address your specific situation. You may find qualified consultants by contacting professional associations in your industry for recommendations.

Find connections.

Start building a network of people who can offer advice and assistance — even if they’re in a different field. Learning from others who have been in your shoes is very helpful, especially when you’re starting out. If you’re a woman, veteran, minority or live in an area undergoing renewal, you may also be eligible for programs to assist you with funding and more through the Small Business Administration and other organizations.

Protect your investment.

Whether you have a separate location or home-based business, you need to protect your investment by insuring it.

If you’re starting a business from home, you may need to add an endorsement to your homeowner's policy, which covers business property while it's used or stored inside your home. Alternatively, you may want to consider a business insurance policy that provides broader coverage, including liability insurance in addition to covering your business property. This could be used to insure a business operated out of your home or a separate location such as an office or storefront.

Consider a business insurance policy if you:

  • Provide services directly to customers while in your home or at another location. Businesses such as tax preparation or hair services, etc., may require additional specialized liability coverage.
  • Plan to have $5,000 or more worth of business property kept at your home-based business location.
  • Rely on the income from your business to support your household.

Your investment is not just a building or inventory — it includes yourself, your employees and your customers. For many small businesses, unexpected events can disrupt the normal flow of business. What if you're injured or sick? What if a client is injured in your home? In addition to health and life insurance, disability and liability insurance may be needed to protect your income, and with the help of a State Farm agent, you can make a plan for all of these when getting your small business off the ground.

To get a conversation started about your business insurance needs, visit: https://bit.ly/sfsmallbusiness.

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