You may have heard that small businesses that make it past the four year mark are more likely to be successful. There is truth to this. In fact, only 44 percent of small businesses stick around longer than four years. What is the biggest reason for this? Poor risk management is to blame in most scenarios.
Establishing a profitable food business can be a bit of a juggling act. Even with the freshest ingredients and best service, a poorly managed restaurant can be just one accident away from closing its doors permanently. To run a successful startup company, you must actively and accurately manage risk by preparing for the worst.
The following are several specific risks that those running startup companies in the food industry should be careful to manage.
Equipment Risk Management
Food businesses depend greatly on their equipment. Today, most machines are highly automated. If a piece of equipment breaks, some establishments must shut the doors for a time to get things operating again.
By investing in equipment breakdown insurance, the cost of failure or damage by mechanical break downs, operator errors, damages caused by power surges and more are covered. Business interruption insurance is also necessary as it covers any loss of income during equipment failure.
Cybercrimes are huge issues among all establishments today. 46 percent of companies experience some form of data breach, yet only a handful actually have cyber-liability coverage. Cyber-liability insurance covers expenses and data breach services.
It is also vital that you take steps to protect your computer files and equipment.
Spoilage and Contamination Coverage
Issues beyond your control can result in contamination of food or spoilage, which can be costly. Spoilage coverage is recommended to protect your startup in such events.
Food Safety and Recall Risk
Food borne illnesses in the U.S. result in approximately 128,000 hospitalizations and 3,000 deaths annually, according to the Center for Disease Control. Food poisoning is a major problem in the food industry. Because of this, your business needs protection against lawsuits, lost market share and reduced goodwill.
Opening a startup company is a big step with a lot of risk. Before diving head first into the industry, take time to talk to a professional who can guide you through the process. We at QSR are qualified to help point you in the right direction while helping you to establish a solid foundation for your startup.