With access to finance being one of the key obstacles for entrepreneurs in South Africa, business insurance often seems like an unnecessary cost. However, insuring your assets, as well as your ability to continue to operate, is critical for small businesses, says MiWay Business Insurance.
“Cash flow and access to finance are considerable challenges for small businesses and entrepreneurs, and insurance often seems like an additional burden that constraints cash flow even more. But what happens if your assets are damaged or destroyed in a fire or natural disaster? What would the financial impact be if your stock gets stolen? What happens if your employee is injured while on duty? That could spell the end for a small business and that is why every entrepreneur and business should invest in business insurance,” says Christiaan Steyn, Head of MiWay Business Insurance.
Steyn says while you should not cut corners with your insurance, there are ways to bring down business insurance costs namely:
Do your homework
There is such a thing as being over-insured and, chances are, you do not need every type of business insurance out there. To properly identify the insurance you need, conduct an analysis of your business risks, potential exposure (such as natural perils, crime-related perils and accidental damage) and potential size of loss.
Implement risk control
Using the findings of your analysis, try to eliminate or reduce some of the risks e.g. install an alarm or organise a guard at your premises or arrange for suppliers to drop off stock rather than collect it yourself. Ensure your drivers have the right licenses and drive safely. Install tracking devices in your vehicles and reward your drivers for driving safely. Do not keep too much stock at your premises etc.
The residual risks that cannot be eliminated and reduced can then be mitigated by putting the necessary insurance cover in place.
Review your policy annually
It is vital to keep up to date with what you are covered for and how much you are paying for it. There may be unnecessary additional covers that you are paying for and that you can remove
You are likely to get a better deal if you take out multiple products with one insurer rather than using several, so shop around for the best deal and make sure you are comparing apples with apples.
Do not forget the human factor
Most people think only in terms of physical assets when they think insurance, but employees can truly be the difference between success and failure for small businesses. It is important that you consider the risks associated with your employees /workforce and be sure you insure against those you cannot eliminate or reduce i.e. theft or fraud, accidents at work etc.
“Small business is the lifeblood of any nation’s economy and it is important that entrepreneurs and small businesses can withstand the shocks that are part of everyday life. Insurance is necessary and implementing the above advice can help you ensure that you get the most out of your insurance.” concludes Steyn.