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Tech Companies

Insurance Coverage That Technology Start-Ups Should Consider

Most new businesses start with little to no capital. Technology companies are no exception. Even though new technology companies operate within razor thin margins at times there are important insurance coverages that should be seriously considered to ensure their continuation and future success.

Here are the policies you may want to consider:

Technology Errors & Omissions (Tech E&O) – Insurance for failures in your technology service that could cause customers damages. Tech E&O is quite possibly your most important coverage because most everything you do would be considered a professional service and is excluded from General Liability.

•Data Breach/Privacy Coverage – In case you lose sensitive employee or customer data, this policy pays to notify, monitor credit, and anything else you need to do in case of a breach. We wrote another entry just on this here.

•Media Coverage – If you are doing any kind of software/media/social networking. Some of these coverages are added automatically to the Personal & Advertising injury section of the General Liability policy, but are explicitly excluded for companies with a media focus. Examples of these exposures include libel, slander, unintentional copyright violations, etc.

•International Coverage – If you have operations outside the coverage area (US, US Territories, and Canada)

•General Liability Coverage – This is your most basic insurance that most contracts will require: covers basic trip and fall. You can also add supplementary auto coverage for rented and non-owned (including employee) vehicles. If you have company vehicles, you should consider purchasing a Business Auto Policy.

•Property – Cover your computers, servers, tenant improvements. In addition, business income is added to this policy; look for coverage including business income for Denial Of Service attacks, etc.

•Directors & Officers – Insurance if you have investors or stakeholders. Directors and Officers can be held personally liable for decisions of the company, so this coverage can be crucial in securing high profile board members.

•Disability – Insurance for the owners if they are in an accident and no longer able to work.

•Key Man Life – Insurance policy in case something happens to your partner. Both partners buy life insurance policies on each other, so they can buy out the partner’s share. This way you avoid becoming partners with that person’s significant other.

•Health Insurance – Great way to keep your employees on board and attract great talent.

•Workers’ Compensation – Mandated by California and most state laws even if you just have one part time employee. Good news is that rates for most technology workers are very inexpensive. Computer programming is the lowered filed rate in California. We currently see rates around 20 cents per $100 in payroll. 

•Employee Practices Liability – Protect yourself from employment related lawsuits: wage & hour, wrongful termination, discrimination, harassment, failure to promote, etc.

Some of these policies are offered in packages, while others are sold separately. Most large companies that you will contract with will require you to have General Liability, Technology E&O, Workers’ Compensation, and Business Auto.

Feel free to contact us to see which of these coverages would be a best fit for your business.

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Technology Start-Ups Are A Reality

The television network channel, Bravo, just launched it's reality show Start-Ups Silicon ValleyThe premire was last night followed by an after party at RF80 in Potero HillThe show is gaining criticism of it's glamorous description of Silicon Valley young technology professionals. The show is a brainchild of none other than Mark Zukerburg's sister,  Randi Zuckerburg. Sure every start-up has visions of mansions, angel investors, stock options and budget less spending. However, most if not all Bay Area tech start-ups begin with work filled days and nights powered by cup-o-ramen and caffeine.

It is great to see the Bay Area featured in a television series and there is some truth to the glamour that comes with successful start-ups, but we just want to acknowledge some of the hardest working young professionals in the world who live in our backyards (sometimes literally). These technologically smart and savvy have poured their hearts into their businesses with no guarantees of payout our recognition. We happen to insure many small technology businesses and find that the founders are possibly be the most passionate business people around. 

Maybe the term "reality show" is used too loosely these days. Is it really a reality that any of us will be ever be stranded on an island fighting for a million dollars or racing around the world with cameras in our faces? I believe Zuckerburg's show is likely far from reality, but probably highly entertaining as she addressed her critics, “If you don’t like strong, beautiful women… if you don’t like watching hot people having fun in a nice house,” don’t bother tuning in. 

Blogger Savvy Spice, from Silicon Valley herself summed up a good reason to watch, "The show is about entrepreneurs and what it’s like to start and run your own company. If you’ve ever wanted to start your own biz, this show is a REAL inside look even if it is edited by Bravo!"

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5 Steps For Managing Your Start-Up's Hyper Growth

Growth is good, but without properly managing your company's growth you could be setting it up for disaster. Use these steps to control your "hypergrowth."

1. Build a project team. 

If you want to change these three S's, you can’t do it alone. You should assemble a team of your key direct reports, and you might want to include representatives of your leading customers and key suppliers as well.

2. Interview start-up CEOs and experts.

The next step your project team should pursue is to pick the most burning issues your start-up faces when it comes to managing growth.  

For example: Do you have the right organizational structure, or is it slowing down decision making? Are you measuring and rewarding people on the right variables? Are you hiring people who fit well, or are you suffering from high turnover?

3. Analyze research findings and develop a diagnostic tool. 

One you’ve conducted the interviews, you should analyze the results and use the insights to generate ideas for how you can improve your start-up’s structure, systems, and shared values.

4. Compare diagnostic results to best practices and identify improvement opportunities.

Once you’ve completed those interviews, you can assess where your start-up’s structure, systems, and shared values are strong and where there are opportunities to improve them. You should benchmark your start-up against the best practices that you identified through the interviews with other start-up CEOs and experts.

5. Develop and implement improvements.

Finally, you should work with your project team to develop ideas for how to improve your start-up’s structure, systems, and shared values. Here, you should use the ideas from best practices to brainstorm many new ways to make your start-up’s structure, systems, and shared values more effective.

Read the complete article here...