Last year, during our regular administration meetings with my business associates we had a look at what kind of financial products we would need to cover ourselves and create security for our businesses. We had to look at business expenses as a whole to make sure that we had not left anything out that would leave us and our businesses financially unprotected.
As SMME owners, we always worry about a lot of things – any chance of immobility that could cause us to not be able to service our clients, earn an income or pay our fixed expenses. There are several issues we have experienced over the years which include contractual issues, non-payment for our services by clients after the work has been done or unprecedented delays that could potentially paralyse a small business. We also thought about labour issues that we have experienced in the past without any legal support. We decided it was important for us to have some kind of a “Law on Call” kind of service for this kind of eventuality.
“For some of us who are one-man-shows and are not able to employ any employees at the moment – we worry about leaving our clients in the lurch, especially in the middle of a big project.”
We also thought about general business protection that includes basic business and household insurance to protect the company premises and its assets from theft, fire, water damage or any other natural causes that could affect the normal day-to-day operations. We also worry about being hospitalised and not being able to generate any income while we are incapacitated, so we deduced that a hospital plan that pays out some money for the days in hospital would be an ideal solution.
For some of us who are one-man-shows and are not able to employ any employees at the moment – we worry about leaving our clients in the lurch, especially in the middle of a big project. We are always thinking about how we would like to make sure that there’s business continuity while we are recuperating, for instance. This is why, as business associates, we decided to collaborate on client projects whenever we can. Collaborating would not only mean we are able to continue servicing clients, but we can continue to generate an income for the business.
We looked at other financial expenses an SMME is not able to get away from that include policies to protect the business owner – these included personal insurance such as funeral and life policies, retirement annuities, and a will to ensure that everything around personal or business assets is articulated well. When I think about the importance of a will, I think about the business agreements we get into with other business associates/partners and how important it is to make sure it is clear what the deceased is owed and vice versa. The problem is that if this is not spelt out well, it is easy for the family left behind to be swindled by either the other business partners or suppliers when the business owner is not there to clarify the terms of the initial agreement.
Other business expenses include telephone and data costs – the question was whether we should go the prepaid route or commit ourselves into taking cell phone contracts or even get into unlimited Wi-Fi agreements because these are essential tools in ensuring that there are no interruptions to the daily operations. Also, because we use our cars mostly for business purposes, it is important to make sure there is car insurance that covers both personal and business travel.
And then there are the savings and investments we also needed to think about. It is important to have an emergency fund to cover the business when there’s a lack of income due to slow business periods; when it is difficult to secure lucrative contracts. Also, the emergency fund helps us in the cases I mentioned before where there are delays in client payments or non-payment for services rendered. I know it sounds like a lot to think about, but this is unfortunately not a conversation we felt we could avoid. It is therefore crucial for those who aspire to become entrepreneurs to know what they are getting themselves into and to go into business with all of this in mind.
Miranda Lusiba is the founding director of Strangé Consulting – a boutique PR agency specialising in communications, freelance writing, media relations, reputation management and media training.