Home Business NewsFinance News Katie Small: Think starting your business at home is a safe bet? Think again!

Katie Small: Think starting your business at home is a safe bet? Think again!

by LLB Editor
13th Aug 13 12:27 pm

Katie Small, board director at insurance broker R K Harrison on why one accident is enough to stop your plans dead in their tracks

Starting up a business is an exciting thing. I should know – I started one 10 years ago.

I’ve always been driven. When I hit 16 I knew I wanted to work so I sent off about 200 letters to banks until I got my first job at ABN Amro. Then again, starting up my own business wasn’t something I’d really thought about until someone came to me with the idea of starting up a specialist high-net-worth insurance broker.

It didn’t take me long to realise that there was a definite space in this market. People who bank privately, use a high-end art dealer or another specialist service, expect something special, yet too often people were viewing insurance as an afterthought and expecting very little from their brokers. There was a space to offer a genuine advisory service to help people protect their assets and meet unusual requirements – a luxury offering that matched their lifestyle.

I learned a lot in the process of building the business, but there are two key pieces of advice I think people should have at the front of their mind. The first is that no one looks after your money like you do, so whoever your first employees are, or if you decide to partner with someone, make sure that your interests are completely aligned. I started out as a silent partner, but as anyone who knows me will tell you – I can’t stay quiet for very long. Before too long, I ended up being involved with every aspect of my business, from finding markets to underwrite our business to choosing chairs for our first three employees to sit on.

The second thing to always be aware of is the need to have an exit strategy. This might evolve over time, but it’s always good to know what you’re heading for. If you want to sell your business, then you need to make sure that it becomes something someone wants to buy and isn’t entirely revolving around you. If you do want to retain it, then you should always be thinking about the future, with a platform that can expand and long-term performance targets.

When it came to insuring my company, ironically we only had fairly limited requirements. We had a PI broker to look after our professional insurances, and got a commercial combined policy. We also moved straight in to an office, but something we’ve seen increasingly among our clients is people setting up their businesses from home.

According to the Office of National Statistics, 58% of self-employed people use their home for work purposes but home insurance is only designed to cover you for domestic activities. Unless you speak to your broker you could end up finding yourself inadequately covered if you expand your home-based activities to include work.

One of the key differences is equipment as a specialist printer or computer won’t be covered by your standard home insurance. Or if you are producing products to sell (and here I’m thinking of the incredible story of the Cambridge Satchel Company, which started in Julie Deane’s kitchen), you’ll have specialist stock and materials lying around. If there’s a fire or flood, you’ll be hard pushed to explain how that falls under your home insurance.

If people visit your house for work purposes then public liability is essential. Accidents can happen, and the financial costs of someone tripping through your doorway or slipping up in a puddle on your drive can be ruinous.


A break in at your home office can stop you dead in your tracks if you don’t have the right insurance

As your business develops, your insurance needs will too. With your first employee comes the requirement to have employer’s liability insurance. Business interruption cover will help protect your business’s income if a disaster, like a fire at your home, interrupts trading, and I’ve written before about key man insurance.

It’s easy enough to think that if it’s just a small operation to start with, your standard home insurance will cover what’s necessary, but that isn’t the case, and your broker will be able to explain how and where you cover needs clarifying. And never underestimate what your company may become – Google, Apple and Disney all started off in someone’s garage. I wonder who did their insurance?

Katie Small, Head of Private Wealth for R K Harrison Insurance Services

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