Insurance for Growth Stage Businesses

There is a wide range of business life cycles, but most would agree that a growth stage business is one where the revenue, employees, customers, property and more are growing at a substantial rate. It's also a business that generates a lot noise in the media and attracts investors. Most growth stage companies reach their speed by design or often times unintentionally. For instance, growth may come from international expansion or growth through the acquisition of other businesses. Either way, building an insurance plan and risk management strategy to protect its future is a must do.

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Most companies in their growth stage have some of the following characteristics:

• Newly launched product generates exponential sales
• Customer base increases dramatically each day
• Employee headcount increase daily or weekly
• Capital raised exceeds $1mil with multiple rounds
• New office locations
• Burn-rate of funds happens quickly
• Demand from investors increases

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Advisor Tip: if any part of your business is growing faster than you expected, chances are you fall into the growth category and should speak to an advisor about a custom insurance program to grow with your business.

There are a lot of growth stage business insurance policies to choose from. They can be a bit overwhelming when you're trying to find the right type for your growing business, especially if it has been in business less than 5 years. The first step is to determine what kind of growth your company is experiencing is to ask the following questions:

• Are you hiring more employees? 
• Is your customer base growing?
• Are you purchasing more property? 
• Have your raised more money or burning more cash?
• Have your sales grown significantly over the past 3 to 6 months?
• Are you moving into a bigger office faster than expected?

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Your exposures as a business are simple when you consider the elements of any business. There are people, property, and third parties like customers, vendors, or partners. We always want to make sure these three areas are always covered and limits are prepared for the future. Some of the most common insurance policies that should be considered with growth are the following:

• Commercial General Liability: this protects the business from third party bodily injury and property claims. As your customers base or proximity to people increases, the limits should be increased.
• Commercial Property: this covers any property you own, rent, or lease. As you become responsible for more property, your limits should increase.
• Cyber Liability & Data Breach: this defends you if your systems are breached or if any third-party lawsuits are filed due to electric activities.
• Directors & Officers: this protect the personal assets of executives, board members, shareholders, investors, etc. As your business and board grows, the limits should increase.
• Errors & Omissions: this professional liability policy covers lawsuits due to errors, missed deadlines, budget problems, and other professional cases.

The total cost for an insurance package covering your growing business depends on numerous factors. As things like your people, your property, or your customer base grows, the cost of insurance will increase. Below are some of the most common elements that affect the price of insurance:

• Business Operations: an office-only business will pay much less than a manufacturer.
• Total Projected Sales: a business doing $5m in sales will pay much less than a business doing $25m in revenue
• Number of Workers: more people create a higher chance of losses
• Number of Locations: more locations to insure create higher premiums
• Territory of Operations: domestic only pay less than domestic + foreign operations
• Risk Management Safeguards: business practices like alarms, employee handbooks, and cyber defense systems decrease premium
• Prior Claims & Lawsuits: insurance carriers charge more if you have prior losses or lawsuits. Insurers are businesses and if they deem you a company that will cost them money, they will charge more.

On average, a startup pays anywhere from $2,000 a year for the most basic insurance package, but growing businesses with higher sales, more people and property, can pay $7,000 to $10,000+ if they include all the necessary coverage. Below are the average prices for each key coverages we mentioned above:

• Startup Business Owners Policy: $500 to $1,000 a year
• Commercial General Liability (CGL): $300 to $750 a yea
• Commercial Property: depends on price of property - 1% to 5% of the value
• Product Liability & Recall: $250 to $500 a year
• Cyber Liability & Data Breach: $400 to $750 a year
• Business Automobile: $200 to $500 for non-owned, $2,000+ for owned autos
• Commercial Crime: $500 to $750 a year
• Fiduciary Liability: $400 to $600 a year
• Group Health Insurance: $300 per person
• Workers Compensation: depends on type of worker 0.1 to 1% per $100,000 in payroll
• Employment Practices Liability (EPLI): depends on number of employees - $250 to $500 per worker
• Directors & Officers (D&O): $2,000 to $5,000 a year
• Key Person Insurance: $1,000 to $5,000 a year

Call, text, or email us today, or schedule a meeting, and speak wit a Fullsteam Cannabis Advisor. You deserve a specialized insurance agent, modern processes, and an insurance carrier that has your back.

The process to get insurance is usually an easy and straightforward process. At the end of the day, our job as brokers and advisors is to educate you on what everything means and collect the information to educate underwriting. Some traditional businesses can move through the process faster as a lot of underwriting is supported by artificial intelligence, but most policies today will be reviewed by an actual person.

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The standard process to produce quotes for your startup is as follows:

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1. Introduction with your advisor: this can be a quick phone call, email, video conference or in person meeting. You'll decide if you enjoy the advisor and trust their advice. This is also where you'll be able to ask questions, provide information about your operation, and go over the process to get insured.
2. Data Collection and Underwriting: this is where you'll get into the fine details about underwriting questions and information that will be necessary to engage the insurance market. You'll be able to chose from filling out PDF's, going through our smart-form technology, or provide it all over the phone, email, or in person.
3. Quote Review: once your advisor has the information needed for underwriting, they will work with the insurance market to produce quotes. This can take a day or up to a week, depending on the time and operation.
4. Finalize Coverage: here you'll decide the coverage to move forward with. Final steps include signed documents, payment, and selecting a specific start date.

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Advisor Tip: take 5 minutes out of your day and speak with one of our advisors. We'll learn about your operations, provide estimates for annual premiums, and go over the process to get your business covered.