Hire a Pro for Insurance Needs

Q: I am in the vending machine business and in need of reasonable commercial insurance. Any suggestions on where to look first?

--D.S., Palm Springs

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A: The important questions are not just how big the premium is, but what the insurance covers and whether it pays if you have a loss. Shopping for price alone is not a good strategy if a single loss that goes uncovered or a lengthy delay in payment can wipe out your business.

I would strongly suggest that any small-business person work through an insurance agent or small broker who understands your business and can make certain you buy the right type of insurance, cover all your possible losses and place the coverage with reputable carriers.

Small-business owners who try to manage their insurance purchasing alone often do not understand what is excluded from policies, and they may find themselves unprotected in emergency situations.

You should look for an agent or broker who handles commercial accounts with businesses similar in size and type to yours. These agents or brokers will be the most familiar with the special coverages or kinds of losses specific to your industry.

Don’t be afraid to shop your business to several agencies, ask questions about coverage and seek experience as a key selection factor.

--Tim East

Manager, risk management business

process, Walt Disney Co.

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Q: I am a French national. Can you tell me what I have to do to run my own business in the United States? How long before I will see my first penny?

--I.V. Teng, Moreno Valley

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A: I deal with at least five clients a month who are foreigners wanting to establish a small business in Los Angeles. Some are already in the United States, others send me faxes from their countries.

I give them basic information on how the U.S. business system works, refer them to CPAs or other experts and do their legal work. As long as they are investors and employers, they don’t usually have problems with their immigration status. If they want to be employed by someone else, they need to obtain green cards.

If they’re using foreign capital to invest, as long as it is decent money, there will be no problem unless they’re interested in broadcasting or certain industries regulated by the Federal Trade Commission. The FTC and Federal Communications Commission restrict the use of foreign money in some enterprises.

My advice is: Before you invest in a business in the United States, look for a good consultant to help you. You can probably find someone who is knowledgeable and speaks your language through a cultural community organization such as a Korean cultural or business group, a Japanese group or a European community group.

A consultant can help a lot with U.S. laws, business practices and such things as choosing a location and what type of business to open. If you do not have any business experience, you might consider investing in a franchise, where the business systems and practices are already in place.

Usually, in the first six months or one year of a new business, it’s not easy to make money. I tell people to set a goal of breaking even in the first year and actually turning a profit in the second year.

Asian-American Economic Development Enterprises Inc. is a nonprofit organization that helps immigrants with small-business opportunities and holds seminars on import/export and other aspects of business. You can reach them at (818) 572-7021.

--David Fang

Immigration and business attorney, City of Industry

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Q: I have heard that there is an association of retired business people who provide information and guidance to people starting up a new business. If you have any information on this, I would appreciate it. My son is planning to start a business.

--Thomas Bristol, Granada Hills

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A: SCORE, the Service Corps of Retired Executives, helps entrepreneurs start and operate small businesses. The national organization, staffed by volunteers who are retired executives, managers and business owners, is sponsored by the Small Business Administration.

The Los Angeles SCORE chapter, operating from Glendale, has so far held more than 4,000 counseling sessions and put on more than 100 seminars and workshops in 1996. In any given month, SCORE sponsors eight to 10 workshops on topics such as starting a business, promoting an invention, obtaining financing, developing a business plan and designing a marketing strategy.

The workshops are held on weekdays and typically cost $15 to attend.

One-on-one counseling for potential business owners is also available on weekdays at SCORE’s Glendale office, 300 N. Brand Blvd., Suite 190, between 9:30 a.m. and 2 p.m. Appointments are not necessary. SCORE counselors also visit chambers of commerce throughout Southern California to meet with business people. Contact your local chamber office to make an appointment for a counseling session there, but remember, SCORE counselors cannot give legal or accounting advice.

--Harry Spitzer

SCORE publicity, Glendale

If you have a question about how to start or operate a small business, please mail it to Karen E. Klein, care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to business@latimes.com. Include your name and address. The column is designed to answer questions of general interest. It should not be construed as legal advice.