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Welborne Associates

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October 2010

This month we are featuring Insurance Basics<= /a> and Social Networking.

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The Insurance Basics: Property, Liability and People

By David Trahair<= /span>

Most people are familiar with the "everyday insurance" triad: automobile, home and life. Unfortunately, that familiarity often doesn'= t extend to the multifaceted fourth leg of the insurance chair for many: business insurance. If you run a small business, what you don't know about busin= ess insurance can hurt you. The terminology used by the insurance industry often is overwhelming, but basically there are three types of insurance= for your business: property, liability and people. Here's a look at all thr= ee.

Property: cov= ers building losses

Basic property insurance covers your business against unforeseen losses due to fire, lightning, vandalism and other mishaps. Optional coverage can als= o be obtained (at additional cost) to cover against less likely events such = as earthquakes and floods.

Property policies essentially fall into two groups. A "named-peril" po= licy will cover certain losses resulting only from causes that the policy identifies. An "all-risk policy" covers any type of loss exce= pt for those specified in the policy. The difference is important — one po= licy specifies what it will cover, while the other identifies losses that it won't. So pay close attention to these details. Once you decide what so= rt of protection you need, think about what items you will need to cover. = This checklist is not comprehensive, but it contains items worth considering= :

Build= ings, whether owned or leased
Inven= tory and supplies
Machi= nery and boilers
Office equipment, including furniture, computers, printers and fax machin= es
Valua= ble accounting and other paper records
Autom= obiles, trucks and construction equipment
Intan= gible property such as trademarks

Since it's a good idea to buy insurance based on replacement value, it's necessary to take stock of your business and list the items that you ha= ve, along with their replacement values. Make sure you look beyond the obvi= ous, such as notebook PCs and signs not attached to a building. Once you have the list, decide exactly what items are worth insuring and make sure th= ey are covered by the policy.

Liability: gi= ves you legal protection

Liability insurance provides coverage in case your business is sued for something= it did -- or didn't do -- that resulted in property damage or injury to someone. This type of claim is common these days, given the extensive number of lawyers offering contingency fees for their services (if they don't win, you don't pay).

One classic example is someone who slips and falls on your premises and sues for the loss of income (and possibly medical problems) while they were unable to work. Liability insurance covers the cost of damages awarded = to the injured party, as well as the costs associated with your defense in= a lawsuit. Consider these guidelines to determine the amount of coverage.= One way is to use a recent liability settlement in an industry related to y= ours as a guide. Another option is to base coverage on your business's total assets. Check with your trade association and your insurance broker bef= ore making final decisions.

Many insurance companies offer broad coverage in a single policy by combining property and liability insurance coverage into a business owner's polic= y. Unfortunately, it may not be adequate is some cases. For example, it may suffice for a two-person computer consulting firm, while a restaurant w= ith a lot of customer traffic may need more extensive liability coverage. <= o:p>

Note, too, that liability coverage will not protect you against claims for nonperformance of a contract. That's covered by professional liability = or "errors and omissions" insurance. If you're in the engineering consulting business, for instance, you'll want to look into this. (Check out techinsurance.com for an explanation of the co= verages in this area.)

Wrongful termination of employees, sexual harassment and race or gender based lawsuits are generally covered by employment practices liability insura= nce.

People: health and workers' comp

A health plan covering the medical and dental needs of your workers is optional. Workers' compensation insurance, on the other hand, is state-mandated coverage for injuries and illnesses that are job-related, and required by employers in every state except Texas. A workers' compensation policy may pay medical, disability income, rehabilitation = and also death benefits.

It's important that you check with your state's labor department for its definition of "employee." It can include a full-time, 40-hour-a-week person as well as someone who works only a few hours a w= eek.

Choosing an insurance agent or broker

It's never wrong to admit that you may need help in selecting the best insur= ance coverage for your business. That can come from either an insurance agen= t or a broker. An insurance agent represents an insurance company and sells = only products from that firm. A broker, on the other hand, represents more t= han one company and is free to suggest any number of solutions. =

When selecting an agent or broker, The National Federation of Independent Business recommends that you not limit your search to the phone book or online directories. Ask for referrals from other business owners, particularly those with insurance needs comparable to yours.

Make sure the agent you choose has professional accreditation, such as the C= PCU (Certified Property and Casualty Underwriter) or CIC (Certified Insuran= ce Counselor).

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Make Social Networking Work: 7 tips

By Christopher Elliott

Social networking sites like Facebook, MySpace and Twitter connect millions of like-minded people every day through the Web. But did you know they also can help your small business connect with customers? =

"Social networking can help promote a small business in two ways," says Su= san Barnes, a professor and associate director for at Rochester Institute of Technology's Lab for Social Computing. "Loyal customers can create small networks and provide testimonials for the business and employees = can share information with each other through social networks." <= /o:p>

More than half of all small-business owners believe social networking sites = have a place in the business world, according to a 2008 survey by SurePayroll. And one in five companies has genera= ted business from a social media site.

What's the appeal of social networking? There are practically no barriers to entry, for starters.

"Facebook does not charge a fee, nor does MySpace or LinkedIn," says Shaun Clancy, owner of Foley's NY Pub & Restaurant, a small business located across from the Empire State Build= ing in New York that has tapped social networks to increase its business. F= or example, it uses its Facebook account to promote special events, such a= s a Frank Sinatra-themed evening. "If someone is going to offer market= ing opportunities at no cost, why not accept the offer?"

(In fact, none of the social networking sites charge to join, although some, like LinkedIn, have premium levels that are not free.)

Another reason: it's where customers are. Nearly 7 in 10 of American adults vis= it online blogs, communities or social networks, and one-third of those surveyed = say they visit these sites to read up on product reviews to help them make purchasing decisions, according to a 2008 MarketTo= ols report. The promise of this emerging technology is simple. As web strategist Lorrie Thomas puts it, "Small businesses can dominate if they embrace social networking as part of their marketing strategy.&quo= t;

But how? Here are seven tips:

1. Choose your social network carefully. There are dozens of popular sites where a small business can set up shop. Pick yours with care. "LinkedIn is the gold standard for business," says Joe Procopio, president of Intrepid Media, a manageme= nt and technical consulting company based in Chapel Hill, NC. His company uses= it for hiring, sales insight, and monitoring changes in the business landscape. Another good bet for a small business is Facebook, which lets "friends" within your network know what you're working on and what you're interested in. "Facebook is a personal PR machine, and= its hooks between networks allow you to reach people you'd never be able to reach on your own," adds Procopio.

2. Set realistic goals. Any small business that tries to participate in every social network wi= ll quickly become overwhelmed. Experts say a little planning is important. "It's all about quality, not quantity," says Mary Ellen Tribby, co-author of the book "Changing the Channel: 12 Easy Ways to Make Millions for Your Business." She says having a clear objective is a key to success in social networking. "Why are you using a social network?" she asks. "To crea= te buzz? To build a list? To sell a product? To build relationships? Or for feedback?" Depending on how you answer, you can set your sights on building the right relationships with the right people on the right soc= ial networks.

3. Find your audience. Social networking is all about segmentation. So once you've decided whe= re your customers are, chances are you'll have to dig deeper to contact th= em. Do they hang out in a chat room or do they belong to a particular group= ? Kel Kelly of the Boston Web marketing consultancy= Kel & Partners, sa= ys the search may lead you to other social networks that are out of the mainstream. "As an example, if you are selling to moms, you should leverage sites like TheWiseMommy.com," she says. "If you are trying to reach a well-educated, older demographic, sites like Gather.c= om would be a great choice. And if you are trying to reach an affluent consumer, a site like Spire.com would serve you well." =

4. Be a good netizen. Joining a social network may cost nothing, but there are rules that have to be followed and a price to be paid if you don't. A social network isn't another venue from which to broadcast your press releases or new product announcements nonstop. Soc= ial networking guru Shel Horowitz says the cust= omers you'll meet online expect you to actually be a part of the network. "Be helpful," he suggests. "Share information and resour= ces, especially those that demonstrate your expertise." He also recomme= nds posting to a network regularly - at least a few times a week.

5. Open up. Part of what makes social networking an effective tool is that you can easily meet new people. Keeping an open mind is important. "When y= ou join any social network, you need to be an open networker," says J= orge Olson a San Diego-based social networking expert and author of the book "The Unselfish Guide to Self Promotion." So what's an open networker? It's someone who accepts invitations to "connect" = or become "friends" with anyone. "This sounds very simple, = but it is not," he adds. "Many people are still afraid of network= ing, posting their photo or giving their e-mail address online. This defeats= the purpose of networking." Another bonus: Being an open networker is a tip-off to other experienced networkers that you're in the know. Result? Better leads.

6. But don't over-share. Assume that any information you post on a public networking site will be read by everyone you know. Even if you think they're private (for examp= le, if you "protect" your updates on Twitter, the microblogging site). "Even if you create a profile as an individual on a non-business oriented network like Facebook, keep in mind that colleges= and potential customers may come across the information you post there,&quo= t; says John Enright, a vice president for LimeLabs, a Web application development company. Think twice before posting detai= ls such as your political affiliation, personal beliefs and jokes. "T= hey may seem completely appropriate among friends," adds Enright. "But they could be interpreted as offensive or unprofessional.&quo= t;

7. Listen more than you talk. It's a natural tendency to log on to a social network a= nd start spreading the word about your product and service right away. But= you might consider doing more listening, at least in the beginning. "S= mall business owners should seek out blogs, key industry leaders and forums = in their market to become aware of the social media environment for their industry," says Clate Mask, the chief executive of Infusionsoft, a Web application developer in Gilbert, Ariz. When is it OK to get chatty about your comp= any? If you participate in the social network, it will become apparent when = you can begin talking. Often, another member of the network will ask you a question about your product. That's a sign.

With a little planning and research, and by learning the rules of the game, = you can boost your business with the help of a social network. Remember: So= cial media isn't like anything else. "It's about having a conversation = with your market," says Alec Saunders, the chief executive of the Ottaw= a, Canada-based social networking company Iotum. "By engaging customers one-on-one, you lead to conversations, which lead to word-of-mouth. And word-of-mouth is what you want." <= /o:p>

Christopher Elliott writes about business travel and mobile computing, and publishe= s a weekly travel newsletter. You can e-mail him ( chris@elli= ott.org ) or visit his Web site.

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