So You Think You Can Finance? The Pros and Cons Retail in the US

So You Think You Can Finance? The Pros and Cons Retail in the US

Retail sales in the US top four billion dollars each year, so there’s clearly a piece of the pie out there for burgeoning entrepreneurs. Although many starry-eyed would-be Richard Branson’s forget to ask themselves a simple question before they embark on the road to their billions, and it’s “what am I up against?” Understanding different types of retail and business models is integral to understanding where your business will fit on the spectrum of retail success.

How The Business Operates

Obviously, running a brick-and-mortar business is going to have completely different overhead from a simple website, but understand overhead, cost and associate risks helps you anticipate what you’ll need to get started. Dunn and Bradstreet, a notable firm, conducted a study that revealed that 90 percent of small businesses fail because of “a lack of skills and knowledge of the owner.” Say, for example, you’re an excellent yoga instructor with enough capital to start a small studio, it doesn’t matter how good you are at the “lotus” pose if you don’t understand and master the art of bookkeeping– or hire someone who does. Great customer service, smart inventory or service management, effective staff training, strategic merchandising, long-range planning and disciplined leadership are uncompromising pieces to any business that wants to stay successful for the long-haul.

The Strategy Behind The Success

The best product or service in the world will fail unless it begins with a solid, well researched and creative marketing strategy, which includes understanding of your competition. All sales techniques, networking initiatives, advertising, PR and media campaigns fall under the umbrella of marketing. According to Marketing Made Simple, this begins with understanding your customer, and understanding you may not be the best proxy for your customer. Do your research and get into the mind of the demographic you are looking to penetrate, and design your mission statement and value proposition around them. Then, write a marketing plan that’s built to evolve with the changing marketplace. You’re marketing plan could be simple or have hundreds of moving pieces; The American Marketing Association offers excellent, and in-depth tips on creating the best plan for your business.

Ensure Legal Compliance

Some of the biggest and best brands have been brought down by skirting, or simply failing to understand all of the legal risks involved. Most of us have a general understanding that discrimination, tax evasion and embezzlement are a bad idea, but they may not know the intricacies or risk factors involved with the subtle rules of workers compensation or the ins and outs of what at-will termination really means. Protecting your personal assets is also an essential part of successful business operation. There are unique and complex legal hoops for just about every industry, as the law is never a “one size fits all” entity. Food labeling is much different than food preparation for example; every genre of product has its own legal book of rules to follow, so it’s essential to find a knowledgeable attorney, no matter what industry you seek to make a mark in.

Is Your Business Insured Against Terrorism?

Is Your Business Insured Against Terrorism?

picjumbo.com_IMG_7453There isn’t a time in memory when businesses haven’t been touched by the legal and financial implications of war. We’ve worked with and hired veterans who possess extraordinary commitment and skill. Our employees have been sent to war, and we’ve navigated the laws regarding their continued employment. We dutifully pay our taxes, knowing some of the funds will be used to finance the military. But, until the domestic terrorist attacks of September 11, 2001, we never had to consider war, or more specifically, terrorism, when choosing our business property insurance coverage. Until then, insurance companies hadn’t given it much thought either.

The History of TRIA

The aftermath of the attacks on September 11, 2001 changed that, and not for the better. Prior to 9/11, acts of terrorism weren’t specifically included or excluded by most insurance companies. After 9/11, reinsurers had no way to accurately gauge the risk of terrorism exposure, so they changed their coverage to specifically exclude acts of terror. Since reinsurers were no longer covering it, primary insurers excluded terror from coverage as well. State regulators approved such exclusions in most cases.

Since damages resulting from terrorist attacks were no longer covered, many business sectors became vulnerable, including construction, energy, transportation, real estate, and utilities. In 2002, to sidestep any potential threat that vulnerability could bring to the national economy, Congress enacted TRIA, or the Terrorism Risk Insurance Act.

What is TRIA?

TRIA requires primary insurers to offer terrorism coverage for specific types of insurance. To help offset the risk taken on by the primary insurers, the federal government will fill the role of reinsurer, serving as a backstop in the event of a terrorist attack. Primary insurers will submit claims to the federal government’s Share Claim Process. After reviewing and approving the claims, compensation will be dispersed to the primary insurers by the U.S. Department of Treasury.

The Federal Terrorism Insurance Program was established to handle administrative duties related to helping the post-9/11 insurance market recover, as well as to facilitate recovery after any future terrorist attacks. Overseeing the Federal Terrorism Insurance Program are the Secretary of the Treasury and the Federal Insurance Office.

The Future of TRIA

Each time TRIA is set to be considered for extension, anxiety arises from impacted sectors that are concerned about the possibility of canceled or unfunded projects. So, given the importance of TRIA, it’s clear that it will exist in some version for the foreseeable future. Recent history shows that to be true, too. In 2007, TRIA was amended and extended by Congress. In January, 2015, President Obama signed a six year extension of TRIA, staving off new concerns that commercial loans and projects could be halted if TRIA were to lapse.

 

Among other things, the Terrorism Risk Insurance Act (TRIA) requires insurers to offer certain types of coverage for acts of terrorism. But, the Act doesn’t make the insurers go it alone. Instead, TRIA assigns the federal government the role of reinsurer in the event of a terrorist attack. TRIA is the law, and insurers are obliged to abide by it. Click here for more information about TRIA, and click here for more information about the Federal Share Claim Process.