If you sell commercial insurance, you know that small businesses are important to your insurance agency. The nation’s 29 million small businesses outnumber large corporations nearly 1,200 to 1! Here are some other interesting statistics you may not know about small businesses and how your agency can help make sure they have enough insurance coverage at the crucial milestones:
1. The official definition of a small business is a company that employs fewer than 500 people. However, it’s estimated that 90 percent of small businesses employ 20 or fewer employees. And nearly three-quarters of all small businesses are owned and operated by a single person! The smaller the company, the less likely they are to have adequate insurance coverage — or any at all. Another statistic you may not know: Half of the country’s small businesses are based in a home. Many owners of home-based businesses do not realize that their homeowners insurance policy doesn’t cover their company and that they are underinsured or uninsured for their at-home business activities.
2. Small businesses create seven out of every ten new jobs being created nationwide. According to payroll processing firm ADP, small business job creation is at its highest level since 1999. Fast-growing companies need more frequent checkups with their insurance agent to make sure they remain adequately insured, both in terms of property and liability coverage.
3. About 70 percent of new businesses survive the two-year mark. Half survive the five-year mark and one-third of all companies remain in business after 10 years. It’s estimated that one-quarter of new businesses will continue on past the 15-year mark. One of the biggest sources of business failures stems from a lack of planning for the future. Businesses that have a plan for the unexpected, for example, have a much higher survival rate than those that don’t. Make sure your small business customers know that there are a number of insurance products, such as business interruption and key person coverage, that can play an important role in helping their businesses make it through tough times and survive over the long term.