What Driving Insurance Can Teach You

Doing business in a post-recession climate is a lot like driving: everyone wants to stay safe, but most entrepreneurs today know that the financial environment in which they’re active is high-risk. And, try as one might to stay perennially safe, as the old adage goes, the magic happens outside your comfort zone. As a businessperson you can, of course, choose your own profile to a certain extent. You can play things safe and come across as ‘low risk’, or you can play for higher stakes and be ‘high risk’. This is where the analogy to driving comes in handy, for, on the road, there are two types of drivers: low risk drivers and high risk drivers, according to insurance company classifications.

As the rather self-explanatory labels above point out, high risk drivers are those who could incur higher liabilities for an insurer. This, of course, doesn’t mean they’re never allowed to drive on public roads (as driving without insurance is illegal in most of the United States). It simply means they often require an addendum to their insurance policy, as outlined on sr22insurance.net. What makes one a high-risk driver? Any one of the following events in one’s track record:

• A lack of experience. Drivers who just got their license are always considered high-risk;
• A poor credit history. The insurer regards this as an indicator of a reckless attitude toward personal finance, i.e. a potential risk in paying for the coverage premium;
• Numerous minor moving violations, such as speeding or parking tickets and fined;
• One or several DUIs or DWs;
• One or several accidents.

All of the above blemishes on one’s driving track record have a correspondence in the fast-paced world of entrepreneurship. Perhaps you’re a young, wet-behind-the-ears business school graduate with no actual experience in the real world. Maybe you’ve tried your hand at business before, but have failed in some way. Or maybe you simply have bad credit, like many former debtors do, in the aftermath of the global financial crisis. Can you still hope to one day become a successful entrepreneur? The answer is the same as the one to the question ‘can high-risk drivers get car insurance?’ It’s a definite yes. In fact, in business, just like out on the road, you will need ‘insurance’. Here are four lessons that high-risk driving insurance can teach you, as an aspiring entrepreneur.

Lesson #1: You, too, can work up venture capital

Some car insurers want to see a spotless track record and driving history and will not take on other types of debtors. Similarly, some lenders will only help you start a business if you can prove you’ve got good credit. Before you get into thinking that this is an argument in favor of shady loan institutions, think again – and think outside the box. You can find a bank that will help you refinance an old loan, thus improving your credit score and applying for a small business loan. What’s more, loans are definitely not the only way to accrue venture capital in 2014. There are plenty of start-up incubators out there, where you can pitch your idea and convince prestigious angel investors to take a chance on you. The key is to come up with a lucrative business plan, which can convince potential investors that you’re serious about it. This entails sales projections and other exercises in number crunching that will prove their risk can pay off, in the long run.

Lesson #2: Don’t sell yourself short

Some high-risk drivers tend to sign on with the first insurer that will cover them after a violation, fine, accident, or any other risk-increasing incident. What happens is that they get tricked into paying low coverage costs – but, in exchange, they also get insufficient coverage. You want to avoid such a situation, both on the road, as well as in business. Don’t sign up with the first investor, if you’re less than convinced that the agreement you’d reach is lucrative for you. Similarly, don’t take on a new partner, unless you’re sure they’re reliable, responsible, and serious about making things work. And last, but definitely not least, don’t take up a business loan until you’ve done some thorough research of all your options.

Lesson #3: ‘High-risk’ should not mean ‘suicidal’

High-risk driving insurance can, indeed, be costly – but it doesn’t have to. Some insurers actually specialize in this type of coverage and can help you work out a plan that’s affordable to you, fits your budget, meets your specific needs and can be tailored as far as payment plans go. The same can be said about business loans, even if your profile is, by all accounts, ‘high-risk’. The key to making your business plan stick this time, without further jeopardizing your finances and reputation, is to try taking calculated risks this time. Sure, perhaps your business idea is exotic – but this doesn’t mean your startup loan provider needs to be unorthodox, too. By and large, take as many risks in terms of creativity and experimentation as you want, but keep your finances on the conservative side.

Lesson #4: You are only ‘high-risk’ for as long as you want to

A driving penalty will only stay on your record for as long a time as your state’s legislation specifies it. Points off your driver’s license can be erased with safe or defensive driving classes. There are plenty of ways to clean up your act as a high-risk driver – and much of the same applies to business. You can always refinance a loan to improve credit scores. You can get financial counseling, attend courses and seminars to refine an older, failed pitch, and team up with a more competent team for your up-and-coming new startup. Just because you’ve made one or a few poor choices at some point during your time as a driver (or entrepreneur) doesn’t mean you’re doomed to live with the high-risk label forever, or that you can’t improve your own odds at succeeding.