You’ve dreamed of becoming your own boss your whole life. Now that you own a business, you’re finding out that being an entrepreneur means taking a whole new approach to your your retirement planning and your insurance coverage.

As a an owner, you must have a backup plan in place in the event that you’re unable to work. You’ve got to be proactive.

Take an honest look at your risks and your budget and ask: How will my business survive the unexpected?
It isn’t a pleasant topic, but avoiding the reality of the unexpected only puts your livelihood at risk. In case of death, disability or any catastrophic interruption of business-as-usual, you absolutely must have plans in place to keep your company operating.

How much insurance do you need? Mass Mutual recommends you begin this analysis by estimating your overhead expenses using these 5 calculations:

  1. Add up your annual staffing costs: employee wages and benefits, payroll taxes and insurance premiums.
  2. Add up your annual operating costs: utilities, rent, equipment expenses and interest payments.
  3. Add up your annual administrative costs: dues, maintenance, legal and accounting retainers, advertising budgets and office supplies.
  4. Add these annual totals together, then calculate your personal obligation based on your ownership percentage.
  5. Divide your annual stake by 12 to see how much it would cost you to keep your business running for one month of unforeseen interruption.

Now that you have that number in front of you, calculate how many months you’d be able to cover your overhead in case of a prolonged absence. Business overhead insurance is one way to help cover these costs—or at least stretch your company’s emergency fund. Regardless of how you plan to cover your assets, planning is the most important step. Don’t wait: Establish your company’s rainy day fund and consider your insurance options before the expected occurs.