Let ' s now change his business model. He wants to open up a school to teach flying to prospective ATP candidates [commercial air line pilots.] His background includes 14 yrs as a commercial pilot. He wants to set up his own school with a business consultant and teach Americans about flying by flying to far off airports as the students learn to set up mock businesses as they also learn to fly. They learn then, the characteristics of IFR, twin, commercial, teaching flying and ATP as the same time, being tested for one at a time as the FAA rules stipulate.
This time, he wants 100k, part for clerical help in developing repair manuals per FAA rules, to lease 4 small, commercially viable planes and fuel. His business plan shows he can capture 25% of the market for ATP pilots within three years. His insurance costs $5,000 which does not cover liability; only profits. His nut is $4,000 within 6 mo. His risk is small because even if he does not capture his market share percentage, he can easily earn money for flying lessons and have a commercial cargo and charter business concurrently.
Those cover start-ups.
How about expansions?
A cruise line wants to expand from two boutique sized cruise ships to two tall ships and he has three years experience already, earning a profit also. He wants to cover the risk of inadequate profits on the two tall ships. His ships cost him, on a lease-purchase basis, $10,000 a month. Their market value is $3,000,000 each and can net $500,000 a year. His 6 mo nut is 80k. His insurance is $25k. His marketing plan is strong, his history is not long but successful and he has not made major mistakes along the way. He can afford the insurance from the net he is experiencing with the cruise ships.
One may assume that the absence of decision-risk insurance costs current businesses hundred of billions of losses annually, just in the US. Further, factually, 8 of ten start-up businesses fail at the end of five years. If those businesses were forced to make specific changes in time to save them and if the investment made to get them off the ground were insured, instead of eight of ten losing, perhaps the number could be reduced to 5 or even three.
Finally, many thousands of entrepreneurs cannot afford any loses and thus, do not start up -hurting them emotionally for many years of their lives. This type of insurance will permit those entrepreneurs to at least have a risk sharing bearer help them out.
