It’s no secret that the last year, and indeed the last few years, have been quite difficult for small business owners. While that’s true, a new study by Toronto-Dominion Bank (TSX:TD) has found it’s been even harder for solopreneurs. These are entrepreneurs who are the only employees of their business. And these business owners are quite pessimistic about the future.
Today, let’s look at how solopreneurs can stop fearing the future of their business, prepare for it, and thrive!
What the study found
The new survey by TD Insurance found that these solopreneurs were the least optimistic about their business’s future. Only 55% saw their business lasting beyond the next decade compared to 70% of small business owners with more than one employee.
The main issue was that these solopreneurs weren’t protecting their businesses to survive. There was little protection from unexpected events, events that could impact whether the company survives or thrives. In fact, only 33% of companies were insured.
Furthermore, 46% felt coverage wasn’t necessary, as they were the only employee. Solopreneurs also admitted that they held a weak understanding of insurance coverage at 41%, with 63% being less likely to speak with an insurance advisor.
Whether you’re a hair stylist going house to house, a carpenter doing odd jobs, or even an online solopreneur, get insurance. There are many reasons why, but in the end, you’re protecting your business and yourself.
Solopreneur insurance protects your business, your assets, and even your own personal finances. You could end up facing huge losses from lawsuits, property damage, or even medical expenses if you’re not covering yourself.
Types of coverage should include items such as professional liability insurance to protect against lawsuits. Liability insurance is for property damage or injuries. Business property insurance protects you if you lose items in a fire. There’s also health insurance, disability insurance, and even cyber liability in the case of a data breach. Bad things like these are possible and can cost you significantly.
Create an emergency fund
For items not covered by insurance, it’s also quite important to have some cash set aside to prepare for an emergency. This could include opening up a Tax-Free Savings Account (TFSA) to create an emergency fund for your business.
You should aim to create at least three to six months of operational expenses. This would mean creating a budget and putting aside cash just as you would for your own home emergency fund. However, you can also achieve this amount sooner by investing in safe, reliable stocks, bonds, and Guaranteed Investment Certificates.
A great choice right now would be a bank such as TD stock. Shares are down but recovering as we may be exiting this bear market. Shares are down 5% in the last year but up 5% in the last month alone. Yet it still trades at 10.89 times earnings, with a dividend of 4.59% as of writing to add more income. So, prepare now and stop fearing the future! In fact, you could thrive in it.