Home office protection | Home Office Base

Say that you already have a small business up and running in the comfort of your own home. You have a good client network, and business is picking up its pace. One of the next steps you need to bump up in your list is how you can secure both your small home-based business and your home at the same time.

So, how can I protect my home based small business? A fire alarm is a must. Closely followed by a burglar alarm system preferably with motion detectors and security cameras. You also need water and carbon monoxide alarms and a safety vault. As for the intangible aspect, you will need a secure home network. Add a good antivirus/malware protection. Firewalls and DLP (data loss prevention) software will also be useful as would the use a two-factor-authentication (2FA) procedure.

Big or small, any business owner knows that security is an important aspect to tackle as soon as possible. Home-based small businesses often put security off until their business starts to generate substantial income. This move is very risky because certain events and scenarios regarding security can shut down a small business overnight if there are no preventive measures in place. In this article, we will look at the different categories under small home-based business security, what security measures are under each category, and the importance of having each security measure in place.

Security Measures For Your Home-Based Business

Having a home-based business can be a very appealing idea for many, but for those who already have a home-based business in place, they know that it is not as easy as it seems. You may think that your commute to your office is a drag, but people with a home-based business face a different set of problems. From convincing yourself that you have to get up, dress up and go to your home office to do some actual work to making sure that all your files and office equipment are safe, a home-based business has its own challenges.

In this article, we will focus on the security aspect. I’ve actually categorized this into two to make it easier and simpler for everyone.

Security For Your Tangibles

Anything that you can touch will fall into this category, such as printed out files (employee records, printed out contracts), computers, printers, fax machines, coffee machines, and safety vaults. You may want to take a look at investing a small fortune into beefing up the security of your home and installing an intercom system that will allow you to separate your work office from your entire home. Some people prefer this type of separation because they can focus better on the business. It is kind of like compartmentalizing your home; dishes go in the kitchen, tables and consoles go in the living room. This kind of compartmentalizing helps in also setting some people’s mindset into work mode and home mode.

If your office is a different building from your home, then having a burglar alarm can help you keep it secure. Opt for those that call the nearest police station when an alarm is tripped. Sometimes you may not have the resources to invest in a full-on burglar alarm system that has motion detectors and security cameras included. You can buy separate motion detectors, alarms, and IP cameras that you can sync with your smart device. You can also look into installing some water and carbon monoxide detectors. But a fire alarm is a must for every home office, so be sure to get one. Another important thing for you to remember is that you must have a safety vault where you can store all your important documents and other valuables.

Now that we have talked about the safety of those tangible things in your business, you also have to consider some form of fall back strategy that can help you mitigate the loss in case something does happen; in comes insurances. I know, I know, they can sometimes be a pain in the arse, but my honest opinion about insurances is that “it is better to have them and not need them rather than need them and not have them.” But hold up! There are a few different things you may want to ask yourself before you go scouring the internet for insurances.

First, you have to look carefully at the things you value in your home-based business. If you have a few employees working with you, then their insurance should be one of your top concerns. In addition to that, all companies will have some form of equipment that is needed for the business to run smoothly. It can be a few computer units, laptops, printers, scanners, and other usual office machines, or it could be specialized equipment that is necessary for the business to be, well, in business. Some examples of specialized equipment are 3D printers and heat press machines. This equipment should be covered by insurance also. A friendly note, make sure to read your insurance coverage thoroughly so that you know what unlikely events you are covered.

Note: Most insurance will not cover data loss, so be sure to have that covered personally.

Security For Your Intangibles

So your equipment and your employees (if you have any) have been covered in the previous section. Now we go to the more difficult part of having a home-based business, securing your intangibles.

As a home-based business, I am assuming that you are speaking to your clients online, reaching out to your prospects the same way, and providing them with important files via email or online sharing file software. If you think about it, even large companies do this type of business transaction, which means that a security system is needed to make sure that no documents or files can leak out without the proper consent. The only difference you and the large company has is that they employ a team of highly knowledgeable people to deal with their cybersecurity while you have to deal with yours on your own.

To get started, you have to consider setting up a secure home network that only you and the trusted people around you can access. It will minimize the number of people who are using your network and therefore reduce the number of people who can accidentally see a file or document that is classified. Look into investing in a good antivirus/malware protection software for your network. It will help in putting another level of security that will ensure the safety of your files and documents. Firewalls and DLP (data loss prevention) software will also be handy in this area as well as employing a two-factor-authentication (2FA) procedure.

Coming up with strong passwords for your WiFi, email adds, private network, and any other business-related areas that require a password will also add more security to it. Just make sure that you remember those passwords. Now, if you have the means, you can separate your home network from your business network. Some suggest getting a separate account for your business network can help you manage the risks more effectively. Last but not least, you need to back up your files on a different drive and have a hardcopy that you store in your vault. Countless companies have been saved because of the backups upon backups upon backups they have stored.

Note: Having a small business does not mean that you are facing smaller risks.

Identify The Business Risks And Create Security Measures

All types of businesses face risks. A home-based small business is no exception. If you look at the history of some of the big companies in our world today, you’ll see that some started the same way. Your small home-based business might not be facing some of the risks that will be mentioned below right now, but as your business grows and you hire more employees, you too will soon face these risks.

Operational Risk

This type of risk is those that are strictly related to the running of the business. Anything type of problem that will result in the failure of your company to operate is considered an operational risk. Technical failures on your servers or your employee not being able to come in for work due to sickness are just some examples of operational risk. Failures, problems, and setbacks that affect the core operations of your business fall under operational risk.

Having explained what an operational risk is, you can now anticipate these risks and put in place some safety measures to prevent this from happening or contingency plans to keep your business operations moving when the failure occurs.

For example, your internet service provider went under maintenance, or there was some connection problem that cannot be fixed for weeks. Your safety measure and contingency plan can be a prepaid internet service you can purchase at any time.

Financial Risk

If you look closely, all the business risk we are talking about has a financial impact on your business. Still, the definition of financial risk specifically mentions the cash flow within your business. This means that financial risk deals with the money that is coming in and going out of your business, including having enough funds to tide you through the slow months.

An excellent example of this is if your business is catering to overseas clients that pay you in a different currency. Say you are based in California, and your client is based in Germany. Payments made by your client will be in pounds, and that will be converted into dollars as it enters your bank. We all know that exchange rates are always changing, so your business might be making sales, but once converted into dollars, you find that you are actually losing more money than earning. This kind of cash flow situation falls under financial risk.

There are many ways you can manage financial risks, but the first and the most important one is to have the proper amount of insurance to cover for revenue loss. Placing and creating an emergency or contingency fund will also help. Keeping your debt to a minimum will surely help your company in the long run. Having a second source of income, or you can look into investing. The main point is that you should have some form of financial plan if things went south.

Legal or Compliance Risk

The best way to define what legal or compliance risk is by asking yourself if your small home-based business has all it’s permits updated and in order. Depending on the type of business, you will have to follow certain rules, regulations, and laws to keep your business up and running without any problem with the authorities.

As a small home-based business, your compliance risk might not be the same as the big corporate businesses, but this does not mean that you have a lower risk rate. In fact, putting up a small home-based business opens up a whole set of different problems for you. The best way for you to manage your small home-based business compliance risk is to make sure that you have all your permits, licenses, and certifications on hand before starting your operations.

Generally, you will need to secure a general business license, a professional license (depending on the type of home-based business you are running), health and safety license (fire permit, environmental permit, health permit) if your clients frequent your home to conduct business. You may also be required to apply for a sign permit if you plan on putting up a sign where you live. Make sure to check with your homeowner’s association for ordinances regarding this issue to prevent you from dealing with penalties later on. You might also want to check with your local government if a sales tax license is already a part of your general business license because there are places where the application for this license is a separate process.

Once you have all your permits and licenses totally taken care of, the next step is to have it properly filed and displayed (if required by authorities) for future reference. Also, you will have to stay on top of the updates on the rules, regulations, laws, and ordinances that will affect your small home-based business.

Reputational Risk

Problems that arise due to customers having a bad experience with your company or your suppliers losing confidence in you fall under this category. Social media reviews also fall under this risk. The possible problems that can dishearten your potential customers from using your service and also make suppliers think twice before striking a deal with you can really cause your business to suffer a significant loss. These kinds of problems can be prevented if proper management of risk is in place.

The best way for home-based business owners, such as you, to help mitigate this kind of risk is to make sure that you’re appropriately protected from data breaches. Home-based businesses often deal with confidential information, and protecting them is an integral part of the business. Keep your security protocols up to date and make sure that your files are properly secured and encrypted. If you have the resources and time, have a cyber protection policy and procedure in place or hire encryption experts to handle your cybersecurity.

Also, having ethical conduct when dealing with clients will greatly help in this situation. We know that having your office in your home can sometimes feel informal, but be sure to present yourself professionally when dealing with possible clients. Remember that a damage in your reputation is hard to reverse. It is your business’s credibility that is at stake here.

Strategic Risk

As you grow your business, you will have to expand in so many ways. Maybe, in the beginning, it is only you and a friend that is running the biz in your garage, but now you have five employees at your disposal. As your business reaches other areas, you will gain more possible clients and, in return, will face more risks. These kinds of risks that stem from the growth of the business is called strategic risk.

Opening up a new office location or providing your services to a bigger market will bring in more possibilities for your business, and that includes problems. So in order to keep everything running smoothly, you will have to have strategic risk management in place.

Frequently this risk management will include defining your business strategy and objectives, identifying unknown risks that can affect your business, having KPI’s (key performance indicators) in place to keep track of results, establishing KRI’s (key risk indicators) that will help in determining if a risk is worth it or not.

You may not see the importance of having strategic risk management in place for now, but it is best to start early on. As your business grows, it will be easier for you to decide if a particular partnership or a big-time client is worthy enough for your business to take the risk.

Three Basic Insurance Options For The Safety Of Your Small Home-Based Business

Homeowners Policy Endorsement

This will be the first you should look at, especially if you are running a smaller home-based business. It is simple, affordable and will work on almost anyone who is under a solo operation who doesn’t manufacture goods type of business. Ask your insurance agent about this because usually, it is an endorsement or more often referred to as a “rider” by agents that can be added to your existing home insurance. The cost is not that high and can be as little as $50 or even $40 per year.

There are different types of homeowners policy endorsement, and depending on the type this add-on or rider can cover for repairs, loss or loss of use and many others under the premise that the loss or damage incurred is not due the exclusion list that comes with the policy. Make sure to read up on this because, as a small home-based business owner, you will have to make sure that you and your business are covered.

In-home Business Policy

Often the homeowners policy endorsement becomes inadequate because of the growth of your home-based business. The fact that most homeowners policy endorsement does not include natural disasters as part of their coverage is one issue why you might need to upgrade your insurance. If you find yourself entertaining more and more clients in your home office, then it might be time for you to get this policy. In addition to that, this policy has a business interruption coverage that helps protect your business income in the event of a disaster. The in-home business policy will cost you around $250 to $500 per year, depending on the coverage stated in the policy. It is a lot higher than the previous insurance, but this policy can cover as much as $10,000 in losses.

Business Owners Policy (BOP)

Out of the three types of home-based business insurance, this is the most comprehensive one. This type can give you coverage from clients, customers, employees, and contractors who might file a complaint against your business in the future as well as coverage for your property. The average cost is around &1,200 per year but can be as cheap as $350 a year or as expensive as $3,000 per year, depending on coverage.

BOP insurance is actually a collection of policies that are priced cheaper than when you buy the plans separately. Usually, a BOP includes general liability, some business interruption coverage, and also commercial property coverage. You should talk to a professional regarding getting a BOP because not all small home-based businesses are entitled to apply for this type of insurance. The usual BOP candidates are businesses that have less than 100 employees, get less than $1 million in revenue, have a physical or commercial space they own or rent and are under the low-risk level industry. If you qualify then you might want to look into this type of insurance more because some BOP insurances also include cyber liability insurances that cover the costs incurred due to data breach or cyberattack, accounts receivable coverage that will pay for the losses that come from your accounts receivable records being damaged from a list of peril the insurance covers, earthquake insurance, and employee dishonesty.

Some of the business aspects that a BOP does not cover are commercial auto insurance, workers’ compensation insurance, and business expense insurance. These need to be purchased separately if you require this type of insurance coverage for your business.

Conclusion

Having a home office is only slightly different from having a small home-based business. The risks are mostly the same, but small businesses, including home-based businesses, are more prone to bankruptcy than large corporations. This is mainly because small businesses don’t have that much of a financial spare room to deal with major damages and issues like a large corporation do. That is why this article gave you a brief, concise and easy to understand version of what you need to protect and what kind of risks are present for you. You may be running a simple home-based office or a budding company in your home but the concepts are the same. You will face risk factors that you need to address and make sure that you have security protocols in place for unforeseeable events in the future. Protecting your small home-based business will not only mean protecting your business physically but it also means that you need to prepare yourself by assessing the different risks your business is facing or will be facing and creating safety measures to mitigate the damage it will cause. Because no matter how ready you are, sh*t still happens. What you do to deal with the issue and what you do to not make the same mistakes is what matters to your business. Lastly, we’ve given you a brief intro to the three basic insurance available for a small home-based business that you can look at. So remember to not only protect your small home-based business physical assets but also to assess and identify the risks so that you can be prepared to remedy the situation when it happens.

How can I protect my home-based small business?