TOP 10 THREATS TO LANDSCAPE BUSINESSES

Optimism is the fuel that drives the entrepreneurial

spirit, so it isn’t surprising that most small business

owners consider themselves optimists. Too much

optimism, however, can get a small business owner into

trouble. A business plan built solely on the “best case

scenario” is like a house of cards, one gust of wind—or

fire or wrongful termination lawsuit—and the entire

business can come crashing down. That’s why smart

business owners in the landscaping industry temper

their innate optimism with a healthy dose of reality. In

other words, they learn to manage risk.

The first step in implementing a comprehensive risk

management plan is identifying potential risks. To help

you get started, we have provided a list of the top 10

threats facing small business owners. As you read

through the list, consider the unique risks facing your

landscaping business and ask yourself whether those

risks are being managed effectively:

1. Protecting your Property

Property holdings are often a small business owner’s

largest asset. Therefore, for the long-term security of

your small business, it is vital that you evaluate potential

threats to your property and develop a plan to manage

those threats. Begin by taking a complete inventory of all

your assets to determine how a loss might affect your

business and how much coverage you need. Property

coverage can come in many forms to suit your specific

needs, but a typical policy will provide the replacement

cost value for your building and the actual cash value for

your business property.

You have a lot weighing on your budget already, but

don’t make the mistake of planning for the “best case

scenario” when it comes to your property coverage.

Leaving your small business underinsured is a risk too

great to take.

2. Business Interruption

The U.S. Department of Labor estimates that more than

40% of businesses never reopen following a disaster

such as a fire or flood. Is your business prepared to

weather the storm if disaster strikes? If a fire causes the

business owner’s facility to be temporarily unusable,

what would you do? Ideally, you would move to a

temporary location while your permanent place of

business is being repaired, but traditional Property

Insurance does not cover this move or the loss of

income while the permanent business location is being

repaired. Ill-prepared businesses are often forced to

completely shut down operations during repair, which

can do irreparable damage to their brand and leave

employees without work for extended periods of time.

To mitigate this risk, consider adding Business

Interruption coverage to your Property Insurance policy.

This invaluable, though often overlooked, coverage

safeguards your business by covering operating

expenses and lost income while the permanent business

location is being repaired. This will allow you to maintain

payroll and, if needed, reallocate current employees to

help with the cleanup effort.

3. Liability Losses

No matter how well you plan, running a landscaping

business can be fraught with unexpected surprises—the

only way to completely avoid liability is to shutter your

business. Smart business owners do the next best thing:

protect their assets by carrying adequate Commercial

General Liability (CGL) Insurance coverage. CGL policies

provide coverage for claims of bodily injury or other

physical injury, personal injury (libel or slander),

advertising injury and property damage as a result of

your products, premises or operations. A CGL policy with

adequate coverage limits enables you to continue

normal operations while dealing with real or fraudulent

claims of negligence or wrongdoing, and also provides

coverage for the cost of defending and settling claims.

TOP 10 THREATS TO LANDSCAPE BUSINESSES

Insight for business owners and risk managers provided by CLCA Insurance

Solutions

CA # 0l72721

TOP 10 THREATS TO SMALL BUSINESSES

4. Key Person Losses

Many small businesses, especially landscapers, are built

around the talents and expertise of a few individuals. If

an employee crucial to the functioning of your business

departs unexpectedly due to death or injury, would day-

to-day operations continue as usual or would disorder

and uncertainty ensue? Would you be able to maintain

your current level of performance and current revenue

stream? How would you cover for the financial loss of

the employee or pay for a temporary replacement

during his or her recovery? Key Person Insurance can

help you answer these questions with confidence. This

coverage is designed to provide financial stability in a

time of stress and uncertainty, allowing you to keep your

business moving forward without missing a beat.

5. Injuries to Employees

Small business owners, especially those with less than 10

employees, often struggle with understanding their

employee health and safety obligations. Just like their

larger counterparts, small businesses have the same

responsibility to indemnify workers who are injured or

become ill during the course of their employment. Many

businesses do not realize the full effect workplace

accidents have on their organization. Beyond initial

treatment costs and lost production time, on-the-job

injuries have an impact on insurance premiums, which

can increase your costs for years to come. Thankfully, by

managing exposures and promoting safety, it is possible

to control workers’ compensation premiums. Having the

proper pre- and post-accident procedures in place can

drastically reduce the severity of a workers’

compensation claim, and implementing a

comprehensive safety program can reduce the accident

rate. Together, these two steps can produce

tremendous long-term savings.

6. Managing Electronic Data and Computer Resources

Small businesses often lack a formal IT department or

even rudimentary internet security measures, which

leaves them vulnerable to unscrupulous cybercriminals

searching for an easy target. With an estimated liability

of more than $200 per compromised record—multiplied

by hundreds or thousands of customer records—the

cost of a single data breach incident can be devastating

for a small business. If your business stores customer

records electronically, it is crucial that you have robust

security measures in place. In addition to taking

preventative measure to reduce Internet-based

exposures, specialized technology coverage, such as

Cyber Liability Insurance, can help protect your business

against damage from cyber attacks, data breaches and

other Internet-based exposures.

7. Environmental Exposures

Think of a business with significant environmental

exposures. What comes to mind? Most people think of a

manufacturing, mining, or petroleum, but these are not

the only industries at risk for environmental liability

losses. It is important the landscaper performs a

comprehensive risk analysis to determine your own level

of exposure. Keep in mind that because most

commercial insurance policies contain pollution

exclusions, unless you carry Environmental Insurance,

you may be uninsured against significant environmental

loss exposures.

8. Employment Practices

From the moment you begin the pre-hiring process until

the final goodbyes at the exit interview, you are at risk

for a lawsuit. In fact, three out of five employers will be

sued by a prospective, current or former employee while

they are in business. Although many lawsuits are

groundless, defending against them is costly and time-

consuming. Your business should take a hard look at

whether it can afford to defend itself against accusations

of wrongful employment practices. If not, there is an

insurance solution called Employment Practices Liability

that will protect your company against wrongful

TOP 10 THREATS TO SMALL BUSINESSES

termination, discrimination (e.g., age, sex, race,

disability) or sexual harassment lawsuits.

9. Contracts

When first starting out, many new business owners

simply don’t have the time or expertise to adequately

evaluate each clause in everything they’re signing. This

oversight, however, can create major problems down

the road. In many cases, Landscapers become saddled

with large additional risks, accepted via risk transfer

from savvy suppliers or customers. While it’s tempting to

shave costs by skimping on legal fees, making sure your

business isn’t accepting additional and unnecessary risk

can save you a lot of money over the long haul, both in

legal costs and in insurance coverages.

10. Manage Your Supply Chain

Do you rely on one or more third-party suppliers to

produce certain components used in your products? If

you do, a disaster that interrupts your supplier’s regular

business operations could have a crippling effect on your

production abilities. Although you should always try to

minimize potential liability through contingency planning

and other risk management techniques, as supply chains

grow across the globe, sometimes there is little you can

do about the exposures faced by your suppliers. In a

perfect world you could simply avoid doing business

with companies that present numerous risks or that are

unwilling to conform to your standards, but pricing

constraints and niche markets limit the number of

potential suppliers to choose from. Supply chain

insurance is meant to cover losses you incur as a result

of an interruption to your supply chain. Such coverage

allows you to work confidently with suppliers who face

exposures beyond your control.

Insurance is a key component of any comprehensive risk

management plan, but successful risk management also

involves prevention, training and contingency planning.

Contact CLCA Insurance Solutions at 855.662.2522 to

learn more about the tools and resources we can offer

to help you manage risks, control workers’

compensation costs, advance safety and boost employee

morale.