For many South Africans this is an ongoing hardship leading to despair and anxiety, especially amongst the hardest hit – many of them women. Small business startups are said to be the only answer to restore confidence and create employment. Furthermore, StatsSA reported small businesses contributed 22% (R2,3 trillion) of the R10,5 trillion in business turnover in 2019.
South Africans are a hardy bunch, and our entrepreneurial spirit has never been stronger, says Barry Taylor, chairman of the non-life (short-term) executive committee of the Financial Intermediaries Association (FIA).
“We are aware that very many South Africans have risen to the challenge to feed their families, either using their existing skill sets to start their own business, or changing course, upskilling, and offering an array of services within communities. Social media plays an important role in gaining consumer support and creating a strong reputation and client base. This coupled with a desire to grow and create further employment opportunities, has driven the growth in SMME’s. From home renovations and auto repair shops to virtual marketing and financial services, the list is endless.”Start right – assess your risks
Taylor points out that in every business sector irrespective of the services or products you deliver to your customers, there are specific risks a business should assess and budget for. “Often the new business owner has limited prior experience in identifying the risks that could arise, researching affordable solutions, identifying possible claims and weighing-up cost vs. value opportunities.”
Any commercial business should have non-life insurance protection including legal liability cover as possible major claims can have unexpected financial consequences. For instance, if you supply food for public consumption and a case of food poisoning is traced back to your business, a manufacturer of auto parts producing a faulty part resulting in an accident, an accident from an event you are staging or a road accident involving your company vehicle, could all result in a legal liability involving extensive cost. Whatever the circumstances, the cost, loss of precious time and inconvenience can be averted with professional advice and careful planning up-front. Accidents happen and you need to ensure you are adequately covered.
Cost vs. Value – can you afford it?
Taylor says, “A knowledgeable insurance broker can, on the basis of a needs analysis, shop around for an insurance product or solution best suited for your risk profile. The broker will advise on companies with the best reputation, explain the policy wording, underwriting and any exclusions, which items to be specified, excess amounts payable when claiming, and he/she will highlight the pitfalls of being underinsured.”
Should business owners find that their initial premium is affordable and competitive, only to be caught off guard with huge and unaffordable premium increases at renewal of the policy, Taylor says credible market advice up-front from a FIA member company intermediary can be the answer. “A professional and experienced individual serves the interests of their clients and the companies they represent and will prepare a proper needs analysis and a risk profile, plus take your budget into consideration before recommending cover. In addition, proper personal, general and legal liability cover is often brushed over when it comes to short-term insurance. This can be costly and debilitating for yourself and or your company,” warns Taylor.
Ask yourself whether you have the financial means to reinstate everything should you fall victim to an extreme event. According to Taylor, an estimated 90% of consumers and small business owners do not have the kind of capital lying around to replace stolen computers or replace even a delivery scooter. When lacking proper non-life insurance cover, these events can have catastrophic consequences for individuals and commercial businesses.
Taylor concludes, “Make room in your company budget for insurance costs. A professional broker will service your business and personal needs according to affordability and as your business or consultancy grows in size and profitability.”