Hair and beauty is a sector on the rise, growing by more than 15,000 businesses in two years.
It is young and vibrant, with more than 55% of workers aged between 20 and 34. It is in demand, with Australians spending a whopping $22 billion each year.
And perhaps most importantly, at least to me, it is an industry run by strong women, with 97% of its 80,000 workers being female.
While it was many moons ago, I once launched a small business, so I understand the struggle of keeping everyone safe while still worrying about the bottom line.
And although I was in a different industry, what connects us, small business owners, is that we all face risks that threaten our hard work.
I know firsthand the importance of protecting your business from risk, and my current role as the Head of Product, Channels and Risk at business insurance service BizCover allows me to help others protect their small businesses.
While some risks are common across industries, hair and beauty businesses face some unique and costly threats. Here are three of the most common risks professional beauty businesses face and the safeguards that can help protect your business.
- Operating online
Given the demographics, many small business owners in the beauty industry grew up with the risks of cybercrime and understand the threat it poses.
While some are aware of the preventative methods small businesses can do to protect themselves from cybercrime, many don't have the safeguards that can be put in place if a cyber attack does occur.
For instance, what would you do in the following situation?
A hacker gained access to the telephone system of a hair salon and made multiple unauthorised calls to a premium number over the course of a month. At the end of the month the small business received their invoice, which included $30,000 of unauthorised calls**.
Cybercrime comes in many forms and small businesses are often the targets. Last year, the average cost per incident hit a record $63,500 for SMEs.
Luckily, Cyber Liability insurance is designed to help protect you from claims and support your profitability in the event of a cyber breach or attack.
- Third party injury or property damage
Whether you're a mobile beautician or you've got your own salon, chances are you'll be working closely with the public.
One of the most common risks faced by beauticians is the risk of injury or property damage to third parties.
All it takes is a supplier tripping over a cord or a worker spilling some product on your customer's expensive purse, and you could be liable for a claim.
A real-life example of this risk occurring happened when a 70-year-old customer slipped on cut hair on the floor while getting up from the chair inside a barber shop.
The man allegedly sustained a right shoulder injury, and a claim was filed against the small business. A settlement of $75,000 was agreed along with an additional $10,000 in legal fees.
Thankfully, the small business owner had Public Liability (PL) insurance - which provides cover for legal costs and compensation for third party injury and property damage claims – and was covered by the insurer.
- The risk of providing a service
Whether it's haircuts, manicures, or cosmetics, the role of a beautician is to perform a specialised service for a customer.
If your business makes a mistake in that service or fails to meet your customer's expectations, you could be held liable.
Take this beautician, for example, who ran into trouble when removing some fake eyelashes. The glue remover caused issues with the customer's eyes, which resulted in a $50,000 claim against the business including damages and legal fees.
Luckily, the beautician had a policy that included Professional Indemnity (PI) insurance, which protect against financial loss for claims arising from acts of negligence, errors or omissions that involve a breach of professional service.
Top tip: the risk that is unique in the beauty industry
While you could go out and get a separate PL and PI policy, it's important to consider this first. What's unique for some occupations in the beauty industry is the way Professional Indemnity and Public Liability risks are closely linked.
Unlike traditional professions such as accountants, where a negligent act results in financial loss, for beauty professionals, the professional service they provide comes with the risk of injury.
This can make it difficult for insurers to decide whether a claim falls under a Professional Indemnity or a Public Liability policy.
To stop this from happening, insurers through BizCover have created a Combined Liability policy to cover both risks.
**The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Coverage for claims on the policy will be determined by the insurer, not BizCover.
*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2022 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769
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Our founders were troubled by the merry-go-round small businesses had to go on just to get the right insurance cover for their business. So they set out to give small businesses a fair go – in an industry dominated by big players, time consuming paperwork, lack of transparency and poor service levels. They boldly disrupted the insurance market by creating BizCover, an online service to simplify comparing and buying business insurance from some of Australia's leading insurers.
This revolution allowed them to reduce costs, increase pricing transparency and decrease the hassle of getting insured for time-poor and cost-conscious small business owners.
