By: Adam Colgate

Knowing how much insurance you will need as a small business owner can be a challenging endeavor. Nevertheless, having the appropriate insurance policy can save a small business a lot of money.

Needs analysis can give you a better idea of what kind and how much insurance would be the optimum for your business. Of course, buying liability, property and health insurance, in addition to Workmen’s Compensation, can be quite expensive, so assessing your business’ needs and what kind and how much insurance can be crucial.

Evaluating Your Business

The first consideration when using needs analysis for deciding on an insurance policy for your small business consists of accurately analyzing the different liabilities and assets which directly affect the business. These include:
• Property – this includes equipment, real estate and other assets.
• Business Volume – the amount of accounts receivable and the average cash flow of the business.
• Salaries – how much you pay yourself and however many employees the company has.
• Overhead – the cost of running the business including rent, utilities and other miscellaneous expenses.
• Future Trends and the Local Economy – how future trends and the state of the local economy will affect the business in the future.

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