So, you’ve just made the decision to start up your own business, well congratulations! Starting up your own business is no easy feat. It takes a lot of guts to take the plunge and become your own boss. Starting up a motor trade business is an exciting thing. You probably have a massive passion for cars and the good news is that you’ll always be in business since everyone has a car.
Once your business is more settled (you’ve sorted out your business name, the brand, what you offer), you are probably now looking to increase the number of customers you get. The only issue with this, is that once your customers grow, so does your insurance premiums and you need to make sure that you get traders insurance, otherwise you could get in a lot of trouble. So, how exactly do you lower it?
What Services Do You Offer Exactly?
This might sound incredibly obvious, but if you don’t tell the insurance people what services you offer then you might not get cheaper insurance. This is something that is often overlooked but can actually have a big impact on your insurance premiums. To put it simply, insurance is worked out based on the risk factor. If there is a higher probability of a claim, then your insurance will go up.
The risk factor is calculated through a number of factors, such as location, credit scores, the value of assets, the types of vehicles and your personal history. So, if you find that in the first year that your insurance premiums are incredibly high, then the best thing that you can do is specialise in one particular service. Particularly, during your first year. Focusing on just one service will lower your insurance. Once you become more settled and know that you can afford more, then you can branch out (just remember that your insurance will go up).
Location, Location, Location
You probably don’t realise it, but your location will have an impact on your insurance premiums. You need to consider the best location for your business. However, if you decide to stick your business is a more populated area or place with a higher crime rate, then your insurance premiums will go up considerably. This is because they are considered as more high-risk areas, compared to others.
Obviously, you should aim to put your business in the best location, where you believe that you will get the most business. So, this is something which you will have to consider. If security is an issue, then you should consider choosing a location that has good security features. Things like CCTV or fitted alarms might help lower your insurance, since you have a lower risk of a claim being made.
What Vehicles Do You Work with Exactly?
Lastly, if you work on all vehicle types, then this will have a higher insurance premium compared to if you specialised on just one type of vehicle. You will also find that working with the standard run of the mill car will also provide you with lower insurance, since their value is lower compared to sports or prestigious vehicles.
If you decide that you do want to work with sporty cars, then your insurance will go up. There is a very good reason behind this and that is because they are higher in value and are more likely to be stolen (because they are better value). Obviously though, is you sell these sorts of cars then you will make a bigger profit. However, it might be worthwhile waiting until your business is a few years down the line before you sell this type of car.
You don’t want to rush everything at the start and realise that you have no money. This is a common mistake that some businesses make and it’s better to avoid doing this. This isn’t the only mistake that you can make though, so you should make sure to check out this article here about the common mistakes people make when starting a business, as you should try and avoid doing them.