Tips to empower business owners
THE prolonged effects of the economic downturn in South Africa have placed many small businesses under undue strain.
The cost-of-living crisis has cut into consumer spend and the dual effect of high inflation and rising interest rates has undermined the post-pandemic gains of many businesses.
These are undoubtedly tough times for the estimated 2.5 million small and medium-sized enterprises in South Africa that play a pivotal role in supporting gross domestic product (GDP) growth and delivering essential services.
Although the conditions often warrant drastic cost-cutting to remain profitable, I warn against putting risk mitigation on the back burner.
While many businesses may be considering cancelling their insurance policies as a way of reducing their monthly expenses, now is not the time to take unnecessary risks.
Instead, insurance should be “reframed” in the minds of business owners, as less of an expense and more of an investment into the future well-being and commercial viability of their ventures.
Times of economic and social volatility are unpredictable, and we’ve seen first-hand the devastation that can result from unexpected events. The civil unrest and looting in 2021, the severe flooding in KwaZulu-Natal in 2022 and, just a year later, the floods in the Western Cape are all prime examples of why being as prepared as possible for all eventualities is vital to business continuity.
The good news is that insurance products are not one-size-fits-all solutions and should always be tailored to unique business needs.
Tips to better empower business owners when it comes to insurance:
Keep your fleet wheels rolling
Another critical aspect to keep an eye on is the commercial fleet. Whether businesses make use of cars, bakkies, vans or trucks to transport goods, as a mode of transport for staff or to make deliveries, protecting these vehicles against road-related incidents is essential.
Organised road crimes, such as hijackings and the theft of inventory, are significant risks that need to be mitigated to prevent untimely financial losses.
If you are a business owner who is facing increasing financial pressure, instead of cancelling your commercial fleet insurance, you could consider negotiating your premium by engaging with your insurer or designated broker, as a cost-reduction step.
Make your property a priority
In times when profit margins may be under threat and revenue may be dwindling, certain expenses can be trimmed to improve cash flow. However, there are a few insurance products that should be regarded as non-negotiables.
The first of the products is business property insurance.
While certain types of crime are on the decrease, incidents of theft typically increase during times of economic hardship. This is a risk that needs to be accounted for, with cover for events such as theft and attempted theft, vandalism and arson, as well as accidental and intentional damage.
Business property is generally the most valuable asset a business can invest in, so protecting it in regions with high crime rates should be a priority.
Commercial property investment represents a crucial asset for any enterprise. Consequently, prioritising its security, particularly in regions with elevated crime rates, becomes imperative.
Watch out for internal vulnerabilities
The most valuable assets for any business are its employees. However, they can also pose significant risks for employers to address.
Some progressive insurers offer products, such as Staff Dishonesty cover, that can help businesses mitigate risks such as the theft of electronic equipment and stock, as well as instances of dishonesty that could have dire financial consequences if they are not detected early enough.
Many businesses are increasingly relying on this type of coverage to effectively mitigate risks associated with team expansion, the adoption of hybrid work models, welcoming new employees and managing employee turnover.
With financial crimes like fraud on the rise, Staff Dishonesty cover should be a key focus for businesses that are looking to future-proof their operations.