National Entrepreneurship Month: keeping your business alive when you’re down

Durban - South Africa’s entrepreneurs and small businesspeople are the lifeblood of South Africa’s economy. According to the OECD, the contribution by small businesses towards the economy increased from 18% in 2010 to 40% in 2020. But they’re also the least resilient to shocks, as they have limited cash reserves, fewer clients, and are usually dependent on the owner to keep operating.

It's estimated that two out of three SME owners run their own enterprises and do not have any employees, while 32% provide between one and ten jobs. But if a small business owner is unable to work due to illness or injury, it puts the entire business, and their livelihoods, at risk. Even a couple of weeks without income could be disastrous for a small business trying to survive in an already tough economic climate.

It’s a challenge that Zanele Ntulini, the Chief Marketing Officer at life insurer Bidvest Life, is all too familiar with. In a previous life, she co-owned an advertising agency – and when she fell ill and was unable to work, the few weeks had a big impact on the business’s cash flow.

“There’s a very good reason why cashflow is called the lifeblood of a business. Without cashflow, you can’t pay your operating expenses like salaries, rent, utilities, and stock, let alone pay yourself,” says Ntulini.

Today, she’s a passionate advocate for all entrepreneurs and self-employed individuals to protect their incomes from life’s unforeseen curve balls. Bidvest Life’s latest Claims Report highlights the importance of entrepreneurs and small businesspeople protecting their incomes, with business owners (29%) and fitness professionals (26%) being the top claiming occupations in 2021.

“It’s really important for anyone who is self-employed, runs a small business or works on commission – and that includes financial advisers - to have cover that protects them if they get ill or injured. Because if they can’t work, they don’t make money, and that doesn’t just affect their own families, but those of their employees as well,” she says.

“Financial advisers were another high-claiming occupation for income protection in 2021, and the fact that two-thirds of our top 100 supporting Independent Financial Advisers have their own Bidvest Life policies illustrates that we are the product of choice for many advisers.”

Ntulini says there are two key factors that come into play when insuring small business owners and commission earners. One is the waiting period: they start losing income immediately when they are unable to work, so it is critical that they have as short a waiting period as possible. The second factor is the sensitivity to the claim: a minor finger injury, which wouldn’t affect someone working in a more traditional occupation, could result in a musician being unable to work for a few weeks.

“It’s vital that life insurers and financial advisers do everything they can to ensure more South African small business owners have the security that comes with a monthly income, by prioritising income protection and business overhead benefits. For entrepreneurs and self-employed individuals, even a short-term interruption in your income due to injury or illness places the financial future of your family, your employees and their families at risk. We’ve always believed that income protection cover should be the foundation of any small business owner’s financial plan,” said Ntulini.