Even the most successful small businesses usually operate with a tight budget. It’s generally just in their nature – without a large corporate stock structure or board of investors, all the capital put up for the business comes directly from the small business owner and maybe a select few investors.
For this reason, cash flow is a key factor in running a successful small business. Ensuring that bills are budgeted for and payments are made in an efficient way that corresponds with how much gross income the business is bringing in is important.
For many small businesses, their finances are very structured when it comes to budgeting. Every dollar is neatly allocated. If a small business owner works out of their home, as many do, they need to protect themselves against major unexpected expenses. Often, adjusting their small business’s budget to have small savings can take care of some larger expenses, such as losing a big client or needing to pay for new technology.
However, these small budget adjustments likely won’t help to cover the huge expenses that small business owners can incur when something happens to the structure of their home.
Structural Home Warranties
The structure of your home can be anything from the foundation to load-bearing beams or walls. Unfortunately, one in every four homes eventually undergoes structural breakage or distress. The repairs to the structural aspects of your home can cost somewhere in the ballpark of $42,500. That’s a huge unexpected expense. What’s more, because home insurance only covers structural repairs when the damaged or broken parts of the home became so through an unprecedented event (like a tornado, earthquake, or home break-in), this expenditure isn’t offset by any kind of coverage. This is where structural home warranties can come into play. A structural home warranty can cover your home’s structural elements, like the foundation, columns, roof framing systems etc.
How Do Home Warranties Work?
Home warranty companies like Philadelphia headquartered Total Home Protection provides protection against these massive home repair costs should something need fixing or replacing. A contract holder pays a low monthly premium, and when something needs to be looked at by a technician, they place a service call with their home warranty company. The company reaches out to their network of technicians and professionals and has someone out to the contract owner’s home as soon as possible to work on the damaged system, appliance, or foundational component. The contract owner then pays a small service call fee (often a few hundred dollars or less) rather than the full cost of what can be a several thousand-dollar repair or replacement.
How a Structural Home Warranty Can Help a Small Business Owner
Small business owners need to work to optimize their cash flow. By investing in a structural home warranty, they can budget more effectively. It’s much easier to budget and account for a small service call fee and a monthly premium rather than going into debt or out of business over a foundational home repair that could cost tens of thousands of dollars that a small business owner doesn’t have on hand.
Structural home warranties should be viewed as a risk mitigation tactic for small business owners. Although the monthly premium is an added expense that would need to be worked into an already tight budget, the security that the structural home warranty provides in the event of a potentially dramatic home break-down is certainly a benefit.
Determining if a Home Warranty is Right for You as a Small Business Owner
As a small business owner, you must weigh the value of your expenses very carefully. Spending too much money on any one thing, or on something that may prove to be unhelpful later can cost your business the flexibility to spend or save elsewhere. When trying to determine if a home warranty is a right choice for you as a small business owner, weighing the pros and cons and ensuring you understand the type of coverage you’re signing on for is key. Here are a few things to consider:
- What kind of home warranty is best for you? A structural home warranty will cover the foundational aspects of your home, reducing the costs of repair that could be a death sentence to your small business. However, other warranties cover appliances or systems, and could be equally useful should you have reason to believe they may require fixing.
- Can your budget support the huge costs of repairing or replacing structural aspects of your home? In many cases, the answer is likely no. However, make sure you’re budgeting it out with your specific home in mind.
- Is mitigating the risk worth it to you, personally? For many small business owners, home warranties offer security and make it easy to budget for the worst-case scenario.