Small Business Insurance Tips for Entrepreneurs

Are you on the hunt for small business insurance? If so, that’s a great idea because risks in business are everywhere. However, with so many different types of business insurance, it can be confusing to know what to look for when you’re shopping for the best insurance cover for your specific business.

This First for Women’s guide will make finding the right insurance for your business easier. Not only will you discover the types of business insurance you may need, but also what to do to maintain adequate insurance cover.

Women-owned small businesses in South Africa

Small businesses play a very important part in our economy.  Women have generally faced an uphill battle as they’ve tried to close the gender gap in the small, micro and medium enterprise (SMME) sector of the economy. 

According to Mastercard's Index of Women Entrepreneurs[1] the number of women-owned businesses in South Africa increased from 21.1% in 2020 to 21.9% in 2021 on its Women Business Owner benchmark.

Women have always been pillars of strength in families. And now we’re seeing this beginning to filter into the SMME sector. Consider the following businesswomen’s success stories as evidence of women’s business power:

The co-founder and director of iMED Tech, Nneile Nkholise has shown that optimism and confidence can take any woman far. She co-founded iMED Tech in 2015 to enable people who have lost limbs to live normal lives. 

Commenting about the strength of women’s potential to run companies, she stated, “By launching iMed Tech, I wanted to confirm a theory that women have the power and potential to run companies in the medical technology sector.[2]  

Nkholise isn’t alone in closing the entrepreneurship gender gap between men and women. Sarah Collins, CEO and founder of Wonderbag, designed an innovative non-electric heat-retention cooker. Rural communities benefit from this device without increasing their carbon footprint. Collins’s device contributed to her winning the Climate Change Leadership Award in recognition of her work.

It’s women like these two entrepreneurs who inspire First for Women to help women-owned SMMEs to succeed. However, challenges do persist, therefore, fearless businesswomen should ensure that their enterprises are protected with the right types of business insurance. 

3 small business insurance tips you need to succeed

Small business insurance is critical for budding female entrepreneurs. The world of insurance is huge, making it hard to pick the right type of business insurance for your particular business, but the following three tips will help make your choice of insurance easier.

1. Assess your risks

Business risk is a real thing. Who can forget the impact of COVID-19 on many small businesses in 2020 and 2021? Some of these businesses never recovered. 

There are many more risks small businesses face. Since you can’t eliminate risk, it’s worth finding ways to manage it. This is where business risk assessment comes in.

Business risk assessment is a thorough process to identify potential risks and their impact. Large companies have adopted it to minimise business risk and to purchase the right business insurance. SMMEs aren’t immune to risks so it’s advisable to perform a business risk assessment. This will give you some idea about what sort of insurance you need. 

A business risk assessment follows four steps: 

• Identifying hazards

• Identifying assets that could be impacted

• Analysing their impact 

• Devising the means to minimise the impact of the hazards

All risks should be documented. Whilst some hazards can be eliminated, others can’t. At the same time, risks that can’t be prevented can still threaten the survival of your business. For example, an accidental fire could completely damage your assets such as vehicles, offices or workshops. 

For the can’t-be-eliminated risks, you’ll need to find ways to mitigate them. The right type of small business insurance can protect your business financially.

2. Get the right kind of insurance

A small business armed with the right kind of insurance benefits in multiple ways, including:

• Protecting its bottom line

• Minimising business interruptions

• Avoiding costly and lengthy lawsuits

• Saving money

To enjoy the above-mentioned benefits and more, one overarching business policy isn’t going to be enough. The reason is that your business and its needs are unique, therefore, it’s essential to get in touch with a trained First for Women consultant or broker to help you identify what you need.

There are different types of small business insurance you might need, including the following:

• Public liability: An insurance policy that protects a business owner from third-party liabilities in case they’re legally responsible for injury to another person or damage to another’s property.

• Commercial vehicle insurance: A car insurance that covers business vehicles for accidental damages, theft, third-party liability, fire and natural disasters.

• Errors & omissions: An insurance policy that covers you in case you’re legally held responsible for damages and expenses incurred by someone due to your negligence or inaccuracy. 

• Business interruption insurance: Having this type of business insurance protects your business in case of loss of income due to a disaster such as fire or hail.

• Directors and officers insurance: A type of policy that protects directors or officers of a company from personal losses in the case of their being sued.

3. Review your policy periodically

 Business circumstances, just like personal ones, rarely stay the same. They change and can change fast. For example, you may expand your business by adding two new staff members.

Each change that happens impacts your business risk profile, which means your current small business insurance policy might no longer provide adequate coverage. That’s why you should review your business policy regularly — at least once a year. Take a look at the Complete Commercial Insurance Checklist for Businesses. 

There are numerous business reasons you should review your policy, including:

• Your business is making more money than before

Most business insurers determine premiums based on the amount of exposure they have due to your business activities. When you make more money, it’s likely you’re producing more products or delivering more services. As a result, you’ll need to ensure your insurance is adequate.

• You’re offering new products or services

You could introduce a new product or service. As you adapt to customer demands, including changing economic circumstances, the risk profile of your business changes.

Assuming your existing business insurance still covers you adequately after the change might be a mistake. It’s better to review your business insurance and ensure that all assets are covered.

• You’ve purchased new assets

Your assets make your business hum, enabling it to keep churning out the products and services your customers need. Additional demand requires purchasing new assets such as vehicles, computers or other machines.

All these additional assets may change the premiums of your business insurance. It’s essential to review your policy to ensure you’re not under- or over-insured.

Get more with Biz Assist from First for Women

Small businesses have limited staff, resulting in difficulties fulfilling all the necessary business functions. It’s not unusual for businesswomen to perform numerous functions, including marketing and sales, finance, customer service, management and leadership.

Businesswomen might struggle to execute all these functions as well as they could due to limited time and energy. Fortunately, First for Women offers a great resource in the form of Women’s Biz Assist.

Some of the benefits of Biz Assist include:

• Collections Assist: Cash flow is the lifeblood of any business, whether small or large. Unpaid invoices for small and medium-sized businesses can result in major losses and financial troubles. First for Women’s Collection Assist can help you to recoup your money and put your business back on a sound footing. This frees you to focus on your business’s main functions.

• Digital presence: A small business that’s not online is leaving money on the table. Biz Assist can help you with what you need to attract new business online, including branding, design and using data and website analytics.

• Financial advice: Fully trained finance experts are available to advise on matters such as trusts, wills, basic financial planning and debt counselling.

• Business Concierge: Are you struggling with finding time to perform functions such as booking appointments, purchasing goods and equipment and arranging travel and accommodation? Business Concierge from Biz Assist can help with many such duties, particularly personal assistance functions on a 24/7 basis. Leaving you free to focus on the main business functions to move your business forward.

• Tender Assist: Do you often generate cash from tendering for government or private sector jobs? As you know, it takes skill and experience to prepare bid-winning proposals. Tender Assist from Biz Assist helps you receive timely and relevant tender notifications in your industry; assists with the completion of the tender documentation and offers appropriate tender templates. This can help you land lucrative tenders to keep generating cash.

Learn more about other benefits of Biz Assist here.

Get a small business insurance quote from First for Women

Whether you’re running a clothing boutique, logistics company or digital marketing agency, First for Women has small business insurance that will meet your needs.

It’s easy to get good advice and the right insurance. Simply contact us for a free, no-obligations online small business insurance quote right now.

Sources:

[1] Engineering News: Number of women business owners in South Africa on the rise

[2] African Women Experts: South Africa: Nneile Nkholise, the entrepreneur who uses technology for animal husbandry

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice. First for Women is a licensed non-life Insurer and FSP. T’s & C’s online.