According to the Small Business Administration, a small business is classified as one with fewer than 1,500 employees and annual revenues of no more than $41.5 million. There are an estimated 31.7 million small businesses in the U.S., comprising approximately 44% of the economy.
Given the number of people rethinking their job satisfaction and work-life balance throughout the pandemic, the number of new businesses launched this year is projected to be around 17 million.
Mid-sized companies generally have less than 500 employees and revenues of up to $100
million. That's a pretty significant playing field with a lot of opportunities, as well as some substantial risks.
In the latest edition of the Insurance Speak podcast, Patrick Mitchell, head of executive risks at Coalition, a provider of cyber insurance and security tools, addresses some of the threats small business executives face and how technology is intensifying some of those risks.
Any business that uses technology is increasing its digital risk and Mitchell explains why this matters to small business owners. "The digital economy has amplified the risks for small business," he shares, giving an example of how ridesharing has evolved from hailing cabs to utilizing an application on cell phones, which creates risks for the passenger and the driver.
He adds that technology has also created a number of new exposures ranging from social media posts that may not be accurate to cyber risks and unfair trade practices. He gives an example of a small business owner accused of sexual harassment on social media. The owner may be innocent, but once the allegation is promoted over social media, the damage is done.
Mitchell also explains why small businesses should have directors and officers liability insurance, especially since many do not realize that they are easy targets and company directors can be held personally accountable for claims involving the company.
In terms of cyber risks, Mitchell says that more and more small businesses are becoming targets of cyberattacks and that cyber exposure is at the top of the list in terms of digital threats.
To learn more about the exposures small businesses face and how insurance can help mitigate some of these risks, listen to the podcast above or subscribe to Insurance Speak on Spotify, Apple Music or Libsyn.
Join our LinkedIn group, ALM's Small Business Adviser, a space where small business owners can gather to network, have discussions and keep up with the trends and issues affecting their industries.
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