number of employees, sales [this history can be calculated and compared to weather that occurred in the area during the times of both profitable and unprofitable sales], competition [we can compare competitors' sales with our sales], inventory prices and costs of goods sold, both positive and negative news events, the cost of living indexes, and more.
As has been shown, even successful businesses finding great opportunities to exploit, [buying cheaper inventory, or a "for sale supplier" or other great options to help a company expand] can fail even after making what appears to be good decisions and taking logical steps.
It is a fact that hundreds of thousands of new businesses start each year in the US. It is a further fact that fewer than 50% of those will survive their first year, and by the end of five years, fewer than 15% will have survived. These "Start-ups" need decision help desperately. Hundreds of billions of dollars, divorces and similar dire consequences occur because of one or both spouses' decisions on their small business become ineffective and there is no "Insurance" to cover their investment in their business. The only way to spread this risk would be with this "decision" insurance.
One firm actually sells a limited decision software package called "crystal ball" to help retailers and other businesses analyze weak sales.
Thus, it appears that if refined software is created that includes total business analysis capability, plus insurance that covers business decisions, we have the holy grail.
How might the math for Bod-Bopi work?
The actuary in insurance, among other tasks, must do a mathematical analysis of the likelihood of negative events occurring. Health and vehicle accident insurance two types of insurance we make claims against most. Within Health, we have insurance for doctor ' s visits and for specialists visits after the doctor and for medicine. Naturally, some doctor and medicines are not covered - for naturopathic or for medical marijuana, among other not acceptable claims.
What we see, therefore, are occurrences that are trackable. Trackable events can be turned into insurable events. Insurance actuaries know the likelihood and frequency of events and seek patterns.
Thus, we have reasonable claims and those that we are sure will be turned down. We also have the probably frequency of specific types of claims; a taxi firm will have more accident claims for collusion insurance than will a doctor ' s office. A gym will have fewer heath claims than will an assisted care facility.
An additional difference between Bod-Bopi and other types of insurance is that of duration.
Excluding flight insurance, or vacation insurance, most types of insurance are long term; paid annually but recurring until the insurance company or the insured feels coverage is no longer necessary.
With Bod-Bopi, all coverage would be short-term.
Let ' s now set up some specifics:
The scariest thing for a lot of people who become entrepreneurs, is the week before and opening day - unless there is a huge, pent up demand that the entrepreneur was wise enough to capture with purchase invoices in advance of opening the new business!
Excluding the wise one - let ' s focus on the riskiest business in the nation; restaurants.
The analysis of a new restaurant candidate could include:
employment history, type of restaurant, menu; size of space, cost for improvements, with or without liquor, staff, location, competition within 6 blocks, one's credit, health and the distance the applicant must travel to the restarant from home.
Insurance should cover one ' s needed gross and net for 3 mo. If one can ' t make it in 3 mo, shut the door. The math here is: $4,000 x 3=12k insurance. An insurance claim would be paid at the beginning of the 4 th month if the restaurant closed within a week of the end of the 3 rd month.
Cost for this insurance would be [arbitrarily] $6,000. The insured would actually be getting ½ of the gross back plus the cost of the insurance back.
Now, let ' s try this for someone who is age 22, no experience in anything but wants to have a restaurant-- "just because." The insurance company would say "application conditionally rejected." To obtain acceptance, the applicant would need to: Get at least 3 yrs experience in any restaurant. Attend 2 college classes; one in small business management and one in cooking.
At the conclusion of these met requirements, the insurance would be granted at the cost of $6,000. Let ' s try this candidate;
8 yrs experience in the restaurant field, 2 as manager. AA degree in business. Has 2 friends from closed restaurants to work with him. His insurance cost would be $2,000.
Now, we try a software writer.
He seeks insurance to cover his start-up. He wishes to create a Social Network of pilots. He is a pilot and he took 4 college classes in programming. His nut is $1,000, to cover outside software additions, hosting costs, and misc. His insurance benefit of $3,000 would cost him $4,000. Why? Networking is not a business, it is a social site. It relies on pure advertising. His site is not exciting to advertisers because there is no energy but instead, a very casual environment.
