Durban - So you’ve taken the leap and decided to start your own business. You’ve managed to pool together whatever funds you could to venture out and start earning your own income, independent of an employer.
This could be the right move given the fact that the unemployment rate in South Africa hit a record breaking 35.3% in the fourth quarter of 2021.
But the recent flooding experienced in two consecutive months has left many business owners with their heads in their hands due to the scale of damage.
Statistics from the eThekwini Municipality show that 110 SMMEs were affected at a cost of R20 269 400.
Ian Young, a senior financial adviser from Westville-based advisory firm – EQ Fin, offers SMME owners practical advice from an insurance standpoint, and how planning can help save money when you need it most.
Q: What would someone want to consider if they have started a small business against the backdrop of the recent flooding?
A: “The most important thing is short-term insurance on all assets. Cover must include the basic perils of fire and flood. You must also buy Sasria cover. They should consider loss of profits and theft and public liability to include defective workmanship.
Q: What is the most cost-effective way to protect business interests in times when climate change is a reality?
A: “Most of the cover mentioned above would protect business interests. The most cost-effective way to protect the businesses interests is by using a good brokerage firm.”
Q: What practical advice would you offer to a start-up business owner trying to succeed under such dire economic and environmental conditions?
A: “Make sure you have sufficient capital to start and don’t over commit to bank loans as interests rates are on the increase. If you have a partner, do a buy and sell agreement with appropriate life cover.
“Limit your drawings from the business for the first year or two. Put as much money as you can back into the business. Build up a reserve to help you get back into business in the event of a catastrophe while waiting for insurers to settle your claims,” Young said.