Every business has assets as part of its operation. Typically, this will include assets such as property, equipment, inventory, and automobiles. Assets are hugely important in business because they can be key for generating revenue, they can improve the running of the business and they also impact the value of your business.
This is why it is important to protect the value of these assets so that your business does not lose out financially.
Inflation & Business
It is always important to protect the value of assets, particularly during times of high inflation. A lot of focus is on how inflation affects consumers, but it is also a worrying time for businesses.
There are many ways that inflation affects businesses, including decreasing purchasing power for consumers leading to fewer sales, higher borrowing costs, increased wages for staff and higher overhead and inventory costs just as a few examples.
This means that a business can struggle during times of inflation, and it is easy for businesses to slip into financial difficulties, so you want to make sure that your assets are not losing value too.
Although we are aware that inflation has negative effects on businesses, does it also have good effects? Yes, it does!
Here’s an example showing that inflation provides for businesses:
higher profits. Increased pricing for goods and services including labour, materials, and energy can result from inflationary pressure. Businesses’ earnings will rise if they can pass these increased costs along to customers in the form of higher prices for goods and services.
How to Protect the Value of Your Assets?
So, what can you do to protect the value of your assets? It is important to understand the main risks facing your assets and manage these risks. Often, this is simply a case of maintaining the asset and keeping it in the best possible condition.
Some assets will lose value over time as a result of depreciation and this is a prominent issue with automobiles, which can lose over 50% of their value after just 3 years. Fortunately, you can protect the value of your vehicle with contract hire gap insurance.
This is a type of cover that will ensure that you are not left out of pocket in the event of a write-off when an insurance company would only pay the current market value. Gap insurance would cover the difference between this and the amount outstanding on your finance agreement.
Consequences of Not Insuring Assets
You must take out insurance to protect your assets – it is better to be safe than sorry. You can insure a wide range of business assets, including property, equipment, inventory, vehicles, and even cash and credit.
Without this insurance in place, you would have to cover the cost to replace any assets that are lost, stolen, or damaged and this could have a big impact on both your business and finances. The majority of small business owners ought to obtain both liability and property insurance.
Many small businesses should additionally get specialised liability and property insurance (like “fidelity insurance”) to cover the hazards unique to their particular line of work.
Keep in mind that purchasing too much insurance may drain vital funds from the company to cover pointless premiums while making insurance purchase decisions. On the other hand, not having enough insurance may result in you losing your company.
Business owners must understand the importance of asset value protection and how they can protect their different assets, especially during times of high inflation. It is a difficult time for businesses right now and you want to make sure that you can preserve the value of your assets.
Related Topic: Your Guide to Choosing Small Business Insurance
What Could a Workplace Accident Cost your Business?
Your company will incur costs as a result of accidents and illnesses at work, but what are those costs? You may believe that you are protected because you have some form of safety management in place, pay your insurance premiums, and so on.
What you might not be aware of is that many of the expenditures associated with any workplace accident or case of illness are uninsured costs.
According to estimates, between £8 and £36 in uninsured losses can be expected for every £1 in insured losses from work-related accidents and illnesses. That’s a lot of money that you might lose for every incident.
This is something that is more likely overlooked by smaller businesses that don’t yet have the expenditure to focus on the finer details.
However as your business grows and you employ more people, this information will be vital to your future success.
