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Insurance for small businesses: What should be covered?

Insurance for small businesses: What should be covered?

Small firms contribute to more than 40% of South Africa’s gr...

Forward-thinking solutions to financial compliance woes

Forward-thinking solutions to financial compliance woes

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Insurance for small businesses: What should be covered?

Small firms contribute to more than 40% of South Africa’s gross domestic product[i]. Considering tax and labour legislation has made the SMME space a rather hostile environment, this figure is a testimony to the determination of our nation’s entrepreneurs.


In spite of its challenges, this sector of the economy is expected to become more lucrative thanks to pending initiatives by government to decrease tax measures on businesses in the lower end of the spectrum. Grants received by small and medium sized businesses are also expected to become tax exempt[ii].


With the majority of South Africa’s small businesses operating in the agricultural trade-, tourism- and construction industries[iii], business owners face a substantial amount of risk, as businesses in these sectors require a hands-on approach.


It’s important to insure your small business against those rainy days where disaster strikes. In addition to insuring the business’s physical assets, however, business owners also need to remember that they themselves are their businesses’ most important assets and should be covered too. That’s where life insurance comes in, in the form of contingent liability insurance for major debts, cover for buy-and-sell agreements and key man insurance.


However, the affordability of cover could be a stumbling block for many business owners.

 According to Schalk Malan, executive director at BrightRock, traditional business assurance policies are structured in the same form as personal life insurance policies.


“There tends to be a single capitalised block of cover for all needs, and this cover is priced for the maximum term. This cover structure is not necessarily in the best interest of the small business owner, because the cover increases as your needs decrease – leading to cost inefficiency in the way premiums are structured.”


This is why BrightRock decided to follow a more flexible approach, which allows an upfront premium savings of 30% on average, allowing business owners to invest more funds in their businesses, or allocate the savings to more cover in the event of underinsurance.


Malan explains: “By structuring business owners’ cover to meet their exact needs, BrightRock removes premium waste and saves money from the payment of their first premiums. BrightRock’s unique approach allows advisers to tailor business owners’ cover over time to match the profile of their needs.”


In addition to this, business owners have the unique ability to convert up to R7.5 million of their cover to personal cover at a later stage – without the requirement of medical underwriting.

“Standard BrightRock polices automatically include the ability for you to redirect your premiums to cover your personal needs if your business cover needs reduce or end. This is done free of underwriting, giving you the benefit of the underwriting you initially underwent and premiums you have paid thus far.”


But what to do in the event where the business’ growth exceeds expectations, leaving the business owner with a desire to increase his cover?


Not a problem for BrightRock policyholders, says Malan.


“Standard BrightRock policies automatically have access to an extra cover account, to access later in the business lifetime with only an HIV test.”


What short-term risks should be covered for your small business?

  • Fire, explosion and earthquake
  • Acts of nature (wind, thunder, lightning, storm, hail, flood and snow)
  • Damage caused by bursting and overflowing geysers and water pipes
  • Malicious damage
  • Power surges
  • Impact
  • Fire brigade charges
  • Vehicles or fleets
  • Buildings
  • Contents
  • Travel
  • Employer’s liability
  • Business interruption
  • Stock and money
  • Employee dishonesty
  • Public liability


Long term insurance for a small business: What should be covered?

Contingent liability insurance for major debts

Long term insurance for buy and sell agreements

Key man insurance

Contingent liabilities are liabilities that may be incurred by an entity (like a small business) depending on the outcome of an uncertain future event – such as the inability to honour a major debt due to a serious illness, debilitating injury or death.

This will ensure that co-owners of the business can continue to operate the business with as little disruption as possible in the event of the death of the business owner. It also ensures that the estate of the deceased business owner receives fair value for his or her business interest, as well as the settlement of his credit loan account.

An insurance policy taken out by a business to compensate the particular business for financial losses that would arise from the death or extended incapacity of an important member of the business. 


[i] Making small business work in South Africa (; Small business in South Africa (

[iii] “Small business in South Africa” ()

Published in Insurance
South African businesses rush to the cloud, expect 75% penetration in 2 years

South African business is poised for massive adoption of cloud computing, with some 75% of all applications set to be in the cloud within two years. That’s thanks to the fact that the promises made by the IT industry for cloud ring true.


For decades, IT has served its own interests and not that of the business. With cloud computing, a corner is turned. Cloud delivers. It is secure, it is flexible, it scales – and South African companies, like those in developed countries, are ready to take to the cloud en masse.

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Published in Mobile
James Caan - UK Dragons Den Judge & Successful Entrepreneur

James Caan gives insight into how he has become an internationally successful entrepreneur and why he has decided to come to talk to South African entrepreneurs.



1. Can you tell our readers a bit about your success as an entrepreneur?

Many people dream of being a successful entrepreneur and watching my father run his own business was what gave me the business bug. I realised from a fairly early age that I wanted to follow in his footsteps and become my own boss.


I left home at 16 and after a few years of working in recruitment, I helped my future wife start her own fashion boutique. I didn’t actually have the money at the time but was so desperate to help her that I took out 3 separate overdrafts, something I wouldn’t necessarily recommend now.

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Published in Economy
Wednesday, 26 March 2014 17:42

No business is too small for a proper budget

No business is too small for a proper budget

Many business owners mistakenly think their operation is too small for a formal budgeting process. The budget (of sorts) that many business owners keep inside their heads is often more like a basic recipe, and is usually inadequate to deal with the constant change that every business is subject to.


This is according to Gerrie van Biljon, Executive Director of Business Partners Limited, who says that no business is too small for the discipline of hammering out a formal budget - which needs to be used daily in the management of a business.

He says that proper and thorough budgeting is beneficial to a business as it clearly impacts on its long-term growth prospects. “Business owners who compile and use formal budgets know well in advance when cash will run out and can plan for it. They can also plan properly for business expansion and their financial decisions are often based on carefully thought through facts and figures. In short, budgeting gives them financial control over their businesses.”


Van Biljon says that a business owner must ideally budget at least once a year for the 12 months ahead, but in order for the exercise to be in any way meaningful, the process must meet a few crucial requirements:


  1. The business owner must be involved in setting up the budget. This exercise provokes thought (on the part of the business owner) and it assists in planning once he / she sees the detail. One shouldn’t be leaving a budget up to a bookkeeper or accountant.
  2. An annual budget that is drawn up only to be kept in the bottom drawer means nothing. The value of a budget comes to the fore only when a business owner constantly reviews it, consults it, adapts it and compares the forecast figures with the actual figures - at least once a month, in order to identify material variances.
  3. A budget based on actual figures from previous cycles is a good platform to start with.


A budget for any business should include at least a sales forecast, a cash-flow forecast, and income and expenditure forecast, a capital expenditure forecast and a balance sheet forecast, says van Biljon.


He explains that of these, the most important working document for any entrepreneur is the cash-flow forecast. “Without a cash-flow forecast, a business is at a high risk of running out of cash at some point.


“Many of the common mistakes that business owners make in budgeting has to do with the cash-flow forecast. It is very important that the cash budget takes into account the realities of the business’s debtor and creditor cycles. Business owners must take into account the cash lag from the date of having to pay suppliers to the date on which payments are received from customers.”


Van Biljon adds that often business owners neglect to work taxes such as PAYE, VAT and provisional tax payments into their cash-flow forecasts.


Another crucial part of budgeting is the sales forecast, which needs to be as accurate as possible, says van Biljon. “One of the greatest strengths of entrepreneurs – their optimism and can-do attitude – can also be a limitation if sales predictions are set too high. Realistic yet challenging sales forecasts should be set.”


He warns that despite its obvious benefits, budgeting is still often neglected by business owners, due to factors such as sudden spikes in sales and increased cash flow, or absolute focus on day-to-day operations. “It is very easy to drop your guard and take your eye off finances and business owners need to guard against these bad habits.”


Van Biljon advises such entrepreneurs to rope in support from an advisor or reputable accountant who could help with drawing up a budget. “The mere step of making an appointment with an accountant helps to enforce the discipline of preparing for the meeting, and taking a step back from the operations to reflect on the finances.”


He says that business owners who struggle with budgeting often find that, once they grasp the basic principles, and become comfortable with using spread sheets, compiling and reviewing budgets do not take much effort. “It is not a complex, nor daunting exercise. All business owners need to do is seek proper advice and support, and then dedicate time to draw up a budget,” concludes van Biljon.

Published in Budgeting
Publicity boosts trade – so don’t skimp on your public relations

Public relations is an indispensable tool for big businesses in a fiercely competitive environment. That’s because these companies understand the need for publicity to keep them relevant and visible in the marketplace. And they are prepared to pay for it. Smaller companies on the other-hand, don’t always create a budget – yet PR can give them the exposure they need to grow their presence, build and improve sales and bottom line performance.


So why isn’t PR higher up on the agenda for small to medium businesses when its value is so readily accepted in the corporate space?


PR is routinely under-rated or over-looked when it comes to strategy in small to medium enterprises. That often comes down to reasons which include insufficient budget, a perception of poor value-add (it is difficult to measure results) and the tendency to lump PR into marketing, where it is seen as secondary to other activities rather than being a key driver in building a competitive edge and adding value.


Seeing is believing

But what is the major challenge facing most ambitious small businesses? For many, it is visibility. With an established line of business and a proven method of adding value, the SME that seeks to grow needs to find more customers. That means visibility; the more prospective clients know about who you are and what you do, the more likely they are to engage with you for your products and services.


Today, the internet is the first place to which a great many people turn when they need something. A website is considered essential for all but a very few specific businesses. But your online presence doesn’t end there; in addition to a website, smart small businesses are increasingly turning to their PR company to assist with content marketing.


What is content marketing?

That’s a marketing format in which the creation and sharing of content demonstrates your company’s insights, ability and awareness of issues. It demonstrates your competence and helps new customers to find you.

Content marketing isn’t new, of course. But the internet, in combination with traditional media, makes it accessible to almost any business. Remember that people like to trade with those they know and when your market has an easy opportunity to find out about you, a gap is bridged.

Published in PR & Communications
Top backup tips for SMEs – protect your valuable data from load shedding problems

Although the South African power crisis is being addressed, the local market can still expect the possibility of load shedding, creating a challenge for businesses to say the least. Aside from the disruptions that these outages can cause, there is also the possible resultant damage to sensitive electronic equipment, such as hard disk drives and servers, which can cause data corruption and loss. This can pose serious problems, particularly in the Small to Medium Enterprise (SME) market, where the ability to recover quickly from data issues is critical to the sustainability of the business. In light of this, backups are now more important than ever, and with advances in technology, there are backup solutions that make financial sense to the SME.


Having an Uninterrupted Power Supply (UPS) installed is only part of the solution, enabling a stateful shutdown of equipment. Backups form the other part of a successful load shedding survival strategy, ensuring that data is always stored somewhere safe and can be easily restored in case of a problem. These five backup tips for SMEs will help smaller businesses protect themselves from data loss and the resulting consequences to business that this can cause.


1. Use built-in backup solutions

Many Operating Systems (OS) feature standard backup software as part of the package, and these solutions are proven to work. An example of this is Apple Time Machine, a standard backup solution on all Mac computers. They are also an affordable option for the SME market, and do not require much in the way of investment. Purchasing an inexpensive external hard drive to perform backups to will also provide a level of protection. However, this does not necessarily solve the problem of power outages, as external drives often require an external power source. This is where a UPS comes in, as it can be connected to the external drive to ensure it can be shut down safely in the event of an outage.


2. Ensure rotational backup systems are in place

Having one backup these days is simply not sufficient, because of the critical nature of business data and the consequences of losing this valuable information. It is therefore essential to ensure that you have more than one backup hard drive and that these drives are rotated regularly, minimising the risk should one of the hard drives fail. External hard drives are fairly inexpensive, and the initial outlay of purchasing an additional hard drive is minimal compared to the cost should the sole backup drive fail.


3. Keep your backup off-site (or in the cloud)

Rotational backups enable one drive to be kept on premises and another one to be stored offsite. The saying ‘don’t keep all of your eggs in one basket’ is applicable here – there is no point having three copies of your data if they are all stored in one place, as should the office be burgled, or be subject to fire, flooding or other disaster, all copies of the data are likely to be lost. When using rotational backups, ensure one drive is always locked away safely at another site. Another option is to use cloud-based backup solutions. Many of these are available for free, such as Dropbox and Google Drive, which offer a limited amount of storage space, with additional space available for a nominal fee. Once a cloud backup has been conducted, it can then be incrementally updated, saving bandwidth costs. Cloud backups ensure that no matter what happens on site, a copy of data is always stored somewhere else, and can be easily accessed from anywhere using a web portal.


4. Ensure you can do a bare metal restore

Specifically in server environments, it is not only important files and folders that are stored, but also applications, settings and configurations specific to the OS environment. Should the server crash, getting back up and running quickly relies on the ability to do what is known as a ‘bare metal restore’, which allows you to restore an entire computer system. Using bare metal restore capabilities, the backed up data includes the necessary OS applications and data components to rebuild or restore the backed up system to an entirely separate piece of hardware. This ensures that you can get back up and running on new hardware, with a server that is in the original state as at the last backup.


5. Test your backups

Having a backup in place is all very well, but if this backup cannot be used to successfully restore data, it is practically useless. It is therefore important to understand how your backup works, so that you can test to see whether it is being performed correctly and that your data can be restored should this be necessary. One way of doing this is to schedule a routine recovery on the system to make sure that all data is being backed up. Many of today’s backup solutions come with a wizard-drive file recovery for data restoration, however, often restoration is a more complex process, and it is recommended to use your IT partner to assist with advanced system recovery.


Protect your business and your data

Time and time again, it has been proven that backups save businesses. The increased risk of load shedding in the coming months highlights this need. When power is suddenly cut, hard drives do not shut down properly, and there is a high risk of the disk crashing and losing or corrupting data. Following these five backup tips will ensure that, in the event of drive failure, data can be easily restored with minimal disruption to business. Aside from the risk of load shedding, having adequate backup is also sound business practice, as disk failure is a common occurrence. No business can afford to be without their data, and therefore no business can afford not to have adequate data backup.

Published in Storage & Data Centres
Tuesday, 10 December 2013 11:23

Real cost of absenteeism in SA's workplace

Real cost of absenteeism in SA's workplace

Absenteeism, an employee’s intentional or habitual absence from the workplace, is a growing issue for many South African businesses due to the knock-on effect it creates for productivity, staff morale and a company’s bottom line.


According to Christo Botes, Executive Director of Business Partners Limited, while the impact on larger corporations can be significant, the consequence of regular absenteeism for small and medium enterprises (SMEs) can be detrimental, given that many of these businesses often employ less than 10 employees. 

Tuesday, 26 November 2013 11:11

Bursting through the Cloud barriers

Bursting through the Cloud barriers

Four of the biggest concerns hindering the adoption of Cloud Computing in SA can be easily dispelled, says Vodacom Business


Cloud Computing offers a wide array of benefits – including cost efficiency, faster time-to-market, greater innovation and more agile technology deployment. It also helps improve alignment between customers, employees and partners. Essentially, through the effective use of Cloud computing, Chief Information Officers can focus more on strategic goals, and less on the day-to-day operations. But for Cloud to become a concrete reality for corporate South Africa, a number of perceived drawbacks need to be understood and debunked. This is according to Vodacom Business’ Executive Head of Cloud and Hosted Services, Nkosi Kumalo.

Published in Mobile
SA SMEs urged to review credit payment practises to maintain competitive edge

A number of small and medium enterprises (SMEs) in South Africa are struggling to grow in the current economic environment, as they are not employing more resourceful financial solutions within their business models.


This is according to Gary Palmer, CEO of Paragon Lending Solutions, who says that SMEs that are able to offer their clients more favourable credit payment terms are gaining a competitive edge within their industry.


However, Palmer explains that the 2013 economic forecast for growth in South Africa has been reduced from 2.8% to just 2%, making the outlook for SMEs very competitive. “Cash flow restrictions also inhibit entrepreneurs and SMEs from offering preferential credit terms to their clients, as they would be unable to fund from their own resources,” says Palmer.


“In addition, these SMEs struggle to obtain finance from traditional lenders as traditional lending facilities, such as overdrafts, require collateral security such as property or other capital assets to access working capital facilities.”


He explains that regular credit providers also look at the historical performance of a business and seek strong balance sheets. “This affects small and emerging businesses more so as they have a lack of or a sparse trading history. SMEs are struggling to find a foothold in the market due to limited demand in the current economic environment. They are further constrained by the limited financial recourses available to them, which makes it difficult for them to expand despite having sound management principles.”


Palmer says SMEs need to be more innovative in their financial management practices and explains how  private lenders who provide debtor’s finance facilities take factors, such as payment history, credit record of the debtor, and the business model into account.


“Businesses can obtain short-term working capital via a debtor’s finance credit facility, which uses the business debtor’s book as security. A debtor’s finance facility provides a business with the means to extend competitive credit terms to its customers, without running the risk of facing cash shortages or losing control of their debtors’ book.”


Debtor’s finance involves the purchase of an invoice from a supplier by a financier, who pays a percentage thereof within a few business days, giving the company much quicker access to the liquidity it requires.


“Customers will always seek suppliers who can offer them with extended credit terms, as this improves their cash cycle,” adds Palmer.


He says that a debtor’s finance facility will be especially beneficial to growing businesses with good customer relationships and a healthy debtor’s book. “Credit terms asking for deposits will be less attractive to costumers and early settlement arrangements might negatively impact the company’s profits. Early settlement discounts can range up to 10% which is way more expensive than the cost of a debtors finance facility.”


He adds that a financier’s average term ranges up to 5.5% for debtors with 60 day terms, so the business will lose more by offering discounts to its clients.


Palmer also says that disclosure of using this facility does not have a negative impact on the company's customers because debtor’s finance has become a well-known and valuable tool and shows that your business is applying innovative cash management resources. “It is a flexible solution; as your turnover increases so the debtor’s facility will grow with it,” he concludes.

Published in Accounting & Payroll
Networking activities crucial to SME development and growth

Building relationships with the right individuals is key to the success of a business, due to the long lasting and powerful effect a favourable relationship can bring about. This is according to Gugu Mjadu, Executive General Manager of Business Partners Limited, who says that networking is one of the most useful ways for start-ups to build a business and increase their profile in their respective industries.


Mjadu explains that for the self-employed, building long-lasting business relationships and partnerships is significantly more important than what most business owners believe. “When starting a new business, it can often feel like you have no time for anything, but entrepreneurs need to take a long-term approach and invest in networking and researching groups that might be relevant to their business. The strengthening of these relationships will potentially result in direct business referrals, as well as create a sustainable support network.” 


She says that creating channels to share business know-how is critical in helping business owners succeed, and sharing business knowledge and experience contributes to the stability and growth of a growing SME.


“Ensure that you get involved with business councils and other networking groups, as you’ll be able to ‘mingle’ with others going through the same process as you. Business owners may also find that fellow entrepreneurs can share valuable information on how they are going about building their business.”


She explains that as with other business activities, a strategy should be put in place for networking as it is a business process like any other which should be attended to, but is often neglected.


Mjadu offers the following pointers to help business owners when it comes to networking activities:

  • Approach networking for what it is – a crucial business system like your accounting system, human resources system, or production system. It means that you have to spend some time thinking about it, working on it and maintaining it.

  • Define the business’s target groups – if you don’t, you’ll end up chasing your own tail. How widely your net is thrown depends on the business. For example, a tourism business may want to include an entire country’s networks and sectors such as travel agents, while a niche technology business may choose to start with a much narrower group of specialised suppliers, clients and business associates.

  • Networking only among industry peers is not wide enough. It is inadequate for a printer, for example, to limit his networking only to the local printers association. Seek out clients and business opportunities upstream, downstream and adjacent to your sector.

  • Start with a list of people who are in your network already – your existing clients, suppliers and business associates, but be sure to add new people, or whole categories of people that you want to target. This is just the start - a healthy business network has new contacts coming in all the time, as well as having old ones removed as their relevance fades.

  • You don’t need the latest customer relationship management software. These tools can be handy, but if money is tight you can effectively manage a large network with an ordinary spreadsheet using simple categorisation tools such as colour coding to prioritise contacts. 

  • Relationships take time to develop and are built on genuine interest and mutual benefit. The key is regular contact, but it does not have to be monotonous. Interactions can vary from a call to say thank you, to introducing a useful contact, sending an interesting article or referring a client (and even asking for advice is a good way to make someone feel important). Don’t leave these things to spontaneity - plan and schedule them.  

  • Clean up your contact list regularly, not only removing redundant entries, but reprioritising each contact so that you invest most of your time and energy in the most important ones.

  • Internet-based social networking is important as a medium of contact, and be sure to maintain your presence on sites such as Facebook, Twitter and Linked-In as you would your appearance – neat and fresh.  But you don’t have to “hang around” there. True business networking happens face to face.

  • Think carefully about your business networking calendar so that you don’t waste your time attending events that yield little. But don’t be afraid to experiment to see which events work for you. Get out there!
Published in Sales
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