Small Business - Big Opportunity®
May 12, 2021 | Webinar
How can small businesses stay ahead in today’s uncertain environment? Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce and Eric Nordquist, Executive Vice President and President of Small Commercial and Business Insurance Business Centers at Travelers identified actions that small business owners can take to access capital in the current environment, explained how insurance coverage can help prepare small businesses for today’s complex world and shared how to create a culture of safety to reduce workplace injuries.
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A K-Shaped Economic Recovery
Sullivan opened the session by sharing results from the U.S. Chamber’s quarterly Small Business Index to explain the landscape for small business owners. “There is light at the end of the tunnel,” he stated, with the Q1 2021 Index score rising three points to 55.9. Still, there is a long way to go to reach the pre-pandemic score of 77.1. Complicating matters, the economy has experienced a “K-shaped” recovery which has meant that some small businesses are further along in their recovery than others.
Two major factors influence a small business’ recovery, according to Sullivan: industry and demographics. While sectors such as construction are performing well, industries such as hospitality and restaurants continue to struggle. Alarming demographic trends have also emerged, with minority-owned businesses being both hardest hit by the pandemic and slowest to recover, Sullivan shared. He noted that government aid has become increasingly targeted to reach those small businesses that need it most.
On top of the economic environment, small business owners are facing difficulties finding and hiring talent, explained Sullivan. He identified three major reasons for this:
- Job hesitancy, specifically whether workers feel that it is safe to go back to work.
- Responsibilities at home, such as children in remote school or taking care of an older parent.
- Disincentives to return to work, as a result of unemployment support being provided. According to Sullivan, 1 out of every 4 workers is earning more on supplemental unemployment than they were being paid at their old job.
Sullivan shared tips for small business owners to help combat these challenges, including:
- Build a talent pipeline. Foster relationships with local middle schools, high schools and community colleges to get your organization on students’ radar as a desirable place to work.
- Consider how you advertise a position Salaried positions may be seen as more desirable than hourly positions, even if the pay is the same.
- Be flexible in how you evaluate qualifications. Consider not only technical backgrounds, but also hobbies and extracurricular activities.
Small Businesses Claims
Nordquist emphasized the proliferation of small businesses, specifically those with less than 20 employees, which comprise about 31 million of the 32 million businesses in the United States. Of those 31 million, about one quarter are uninsured or underinsured, leading to vulnerabilities for those businesses and the economy more broadly. Finding ways to reduce causes of loss can help protect small businesses financially, explained Nordquist.
As a property casualty insurer, Travelers handles tens of thousands of property claims each year, according to Nordquist. Two thirds of these claims are non-weather-related, accidents that are more controllable or preventable, such as a fire in a restaurant or a slip and fall. The other one-third of claims are weather-related, which may not be as easily prevented, such as the winter storms in Texas in early 2021. Nordquist described the relationship between a small business owner and insurance carrier as a “partnership,” working together to find ways to mitigate damage and reduce claims, when possible, using tools and techniques to protect them. Many insurance carriers will have services such as risk control to help evaluate a company’s risks and exposures and provide tips and resources to mitigate those.
Choosing Insurance Coverage
Nordquist encouraged small business owners to engage a local independent insurance agent or their insurance carrier directly to understand their coverages and make sure their businesses are properly covered. He outlined a sequential thought process to consider when selecting insurance:
- The quality and strength of the company, including its financial strength and ability to pay claims.
- Insurance policy options available, rather than a one-size-fits-all approach.
He also outlined coverages that small business owners should consider, depending on their size, including:
- General liability insurance for smaller or new businesses, to protect small business owners in the event they are sued.
- Business Owner Policy which would include property coverage and liability coverage.
- Workers Compensation to protect employees in the event of a workplace injury.
Sullivan and Nordquist encouraged small business owners to visit their websites for more information and resources, pointing to www.USChamber.com/SaveSmallBusiness and www.travelers.com/smallbusiness.
Executive Vice President, President of Small Commercial and Business Insurance Business Centers, Travelers