Tough economic times demand increased focus on business support
Owning a business is challenging, especially in the tough economy South Africa faces. The survival of the average business is low, with only 25% of new small- and medium-sized enterprises (SMEs) estimated to survive over the long term1. The main causes of business failure include lack of sales, cash-flow problems and lack of funding2. In addition, businesses also face uncertainty about the future3, owing to a lack of protection against modern-day business risks.
The success of SMEs is important to the country’s economy, since they contribute significantly to GDP and employment. SMEs contribute 34% to GDP and employ 60% of the labour force4. In the State of the Nation Address of February 2019, President Cyril Ramaphosa highlighted the increased focus on supporting small businesses. At the event he said, “Given the key role that small businesses play in stimulating economic activity and employment – and in advancing broad-based empowerment – we are focusing this year on significantly expanding our Small Business Incubation Programme”. A programme which provides much-needed support to small business and promotes success.
Diagnostic tools can help improve a business’s health
An example of a business diagnostic tool is Discovery’s Business Health Check which they developed in partnership with Endeavor South Africa. Endeavor is a global not-for-profit organisation that enables high-growth, scale-up businesses to succeed. Their results show that, on average, supported entrepreneurs achieve compound annual revenue growth of 35% over three years. The average growth of similar businesses is 14%5.
Insurance can help businesses survive
Partnering with the right insurer can give businesses access to business diagnostic tools and risk assessment technology as part of their service offering at no additional cost.
Some insurers, like Discovery Business Insurance, are including new types of covers in standard multi-peril policies to protect businesses against emerging risks. These may include cover against social media blunders, cybercrimes or reputational risks. The insurer could also include limited cover for these events at no additional cost to the client. If the client wants to increase their insurance cover, they may be able to do so at an additional premium.
Article written by: Anton Ossip, CEO of Discovery Insure