Operating A Business Test 3 Flashcards
Uneventful protection for a small business or small business owner
in regards to monetary compensation in the event that a business &/or
personal peril is experienced.
Insurance
Identify business risk to be…
covered
obtain coverage for…
major potential
losses.
Insurance Planning (Risk to consider)
Loss / Damage to property Vehicles / rolling stock Loss of income resulting from business interruption Burglary / Robbery Extensive loss from bad debts Liability to employees Financial hardship Liability to public shoplifting / loss through dishonest employees Death of Key employees Riots / Civil disobedience
life insurance that protects a firm against losses
due to the death of a key person.
Key Person Insurance
insurance on a owner that will supply money for a
partner to buy his share upon death
Buy – sell Insurance
examples of insurance (including but not limited to)
Key-Person Insurance
Buy-Sell Insurance
Protects financial losses
incurred by producers / sellers of goods or services due to injury or damage
resulting fro use of said product.
Product Liability / Malpractice Insurance
insurance that provides monetary benefits to a
business that has experienced an unforeseen peril such as a flood or fire.
Casualty Insurance
Types of insurance
Product Liability / Malpractice Insurance Whole Life Casualty Insurance Universal Life Term Life Insurance
buy for a period of time, dissolves at end of time
period unless renewed.
Term Life Insurance
Refers to efforts designed to preserve assets and earning power associated with a business
Risk Management
Risk Management Considerations
Eliminate risks
Minimize risks
Shift the risk
Absorb the risk
remove the cause (security and/or neighborhood
watch.
Eliminate Risk
good management (morale, pricing, promotions).
Minimize Risks
purchase outside insurance…….to cover the business in regards to monetary compensation in the event that peril is experienced. . . . . business or personal.
Shift the Risk
Percentages of earnings as a
contingency for possible future losses; (property, workers comp. medical).
Absorb the risk (sole insurance)
Those, over a relevant range, which do not change but becomes progressively smaller on a per-unit basis as volume increases.
Likewise, these do not decrease with increased business, nor do they decrease with declining business activity.
Fixed Expenses
Fixed Expenses - examples:
Rent Salaries Depreciation Insurance Debt
That cost which is uniform per unit but fluctuates in
total in direct proportion to change in the related activity or volume.
Variable Expenses
Variable Expenses - example:
Supplies - pins, paper, etc. Hourly wage expense Repairs Utilities Taxes
Any cost not specifically associated with production of identifiable products and services. The cost to open the doors.
.
Overhead
The point at which total sales revenue equals total cost.
Break even point
Break Even Point may also be referred to as…
break even analysis
