It’s been a stressful few years to run a small business in America — and so far 2023 has been no exception. Inflation, supply chain snags and staffing shortages continue to test business owners, the team at Next Insurance writes in a blog post.
It’s truly difficult to “tell what’s coming next,” Next Insurance notes.
Despite the volatile business environment, 90% of owners “aren’t completely confident they have enough insurance coverage for their small business,” according to a new survey by NEXT.
And they found “that 96% of owners didn’t achieve a passing grade when quizzed about basic insurance knowledge.” Nearly 30% don’t carry “any small business insurance at all.”
That should “give all entrepreneurs some pause.”
It’s no secret that small businesses “are vulnerable to risk, but it’s clear not every owner feels confident about how to get the right protection.”
53% of small business owners “said their greatest barrier to getting insurance coverage is simply knowing what kind of insurance package their business needs.”
That’s why their team at NEXT is “on a mission to make learning about small business insurance easier for entrepreneurs.”
Customers can purchase the coverage they need “through our easy online platform and partnerships with industry leaders and agents.”
Alon Shiran, VP of Product at NEXT, said:
“Insurance can be a daunting part of a business, especially because without proper coverage, businesses can endure significant financial losses that could make or break their bottom line. Our goal at NEXT is to eliminate a significant part of that burden.”
According to the survey:
What’s stressing out small businesses? Inflation and professional mistakes, mostly.
One issue still “weighs on small businesses more than any other: inflation.”
When the cost of materials goes up, business owners “have less purchasing power and have to make the tough choice between increasing prices or absorbing more expenses.”
But small businesses are also “struggling as customers cut back on spending while rumors of a recession grow.”
And effects of the pandemic, “like supply chain problems and hiring challenges, also haven’t disappeared.”
As noted in the update, 68% of small business owners told them “that inflation is a top stressor for their business, as high prices continue to cut into their margins.”
As mentioned in a blog post, 42% of owners “named reduced customer spending as a primary concern.”
Almost 30% said supply chain issues “remain one of their business’ biggest stressors.
14% of owners cited labor shortages as a top issue.”
What are the biggest risks to small businesses?
Unexpected accidents “can happen to entrepreneurs in any industry — but all owners have a sense of which risks are especially dangerous to their small business.”
As noted in the update, 51% of small business owners “said making a professional mistake is one of their biggest worries.”
39% of small business owners “said an injury or illness that sidelines their employees would negatively impact their business.”
More owners are “watching out for digital threats: 36% of owners said that cyberattacks and data breaches are among their primary risks.”
Location matters: Urban, suburban and rural businesses
What’s challenging businesses varies by location:
For example, more rural small business owners (71%) “are concerned about inflation than suburban small business owners (64%).”
20% of urban small business owners “are stressed over labor shortages, compared with 15% in the suburbs and just 6% in rural areas.”
Are small business owners prepared for risks?
Many of the risks small businesses face “fall under a term called ‘general liability’ — referring to claims from someone else that your business has caused them harm.”
That could include “a visitor getting injured at your workplace or a mishap that costs your customer money.”
Claims like these “are common for small businesses.”
Still, 96% of respondents “did not get a passing grade — a C- or higher — on a knowledge quiz about general liability coverage.” No one “scored full marks.”
Even more worrying? 29% of small business owners “carry no insurance coverage at all.”
For more details on this update, including Survey Methodology, check here.