Business Blues - consider your risks
Provided by Business Partners Ltd, South Africa's leading investor in SMEs
Successful businesses depend on proper business planning and management. But things do go wrong and such unfortunate events, beyond anybody's control, will cripple a business. There must be contingency plans in place to decrease the risk areas.
Controls to manage risks are essential to ensure your business can keep going should the unexpected happen. Unfortunately, many small business owners see the costs involved as a grudge payment and often let it slip - with disastrous consequences. Where are you most vulnerable?
Death or disability of the business owner, partners and key personnel
What will happen to your business and your income, should one of your key employees die or become disabled? How will you be able to continue your business without affecting the bottom line? Or, if you are a sole business owner - will your family be able to continue with the management of the business?
What will mitigate the risk? Key Person Insurance is available from all the major insurance companies in
No matter how small or what type of business you own, you are required to register and pay annual fees to the Occupational Accidents and Compensation Fund. The Fund protects the interests of employers and employees should a worker be injured, disabled or killed in a work-related accident. It will provide the cover and avoid potential legal action being taken against you.
Globally, employee fraud continues to grow and small businesses usually do not have controls in place to prevent it. Some measures in place:
- Separate financial duties. Make sure the staff member requesting payment is not the same person signing the cheque. By dividing up responsibilities, you will make it more difficult for a person to steal from you and manipulate your records to cover it up
- Get your bank statements personally and review transactions carefully
- Be personally involved with the payroll
- Have more than one employee involved in counting and verifying incoming payments
- Insist that employees who perform accounting/bookkeeping take vacation every year. Embezzlement needs continuous effort
- Have your books audited regularly
- Make sure you understand your books
- Secure your bookkeeping software
Protect your IT systems
E-mail is both a blessing and a curse. Budget for proper anti-virus and anti-spam software and have a firewall in place.
Network security must be addressed proactively. Many small businesses do not have the resources available to deal with IT matters effectively. It may well be your worth to investigate outsourcing IT security.
Ensure that back up policies are in place and adhered to strictly and that a set of back ups are kept off-site in case of fire or other physical disasters destroying equipment.
According to the 2008 SME Survey results, one in four small businesses suffered loss as a result of crime - from petty theft to armed robberies.
What precautions can a business owner take? External precautions such as electric fencing, alarm systems, secure parking and armed guards or armed response will help. Be aware of suspicious looking people in the business or shop environment. It is a good idea to have a surveillance system installed. Affordable CCTV systems are readily available these days.
Report crime - effective policing depends on information. And last, but most important - be insured and keep up the payments.
Fire is always a major threat to small businesses. Even if a business is insured against fire, the damage can be devastating. The insurance payout may compensate you for loss of buildings, equipment and even profits, but nothing can restore the loss of life.
It is in everyone's interest that the workplace is as `fire-proof' as possible and that employees are trained to deal with emergencies.
Fire fighting equipment, such as fire buckets, fire hoses and fire extinguishers, must be kept in good repair and not removed from the places assigned to them. Nozzles, hoses, pressure gauges and seals should be checked regularly and fire extinguishers must be refilled after use.
There should be adequate signage, such as directional arrows, to indicate where the equipment can be found. These signs should be visible from various points on the premises. Fire fighting equipment should only be used for fire fighting. Employees must receive basic instructions on how to operate hoses and extinguishers.
(This article was also published in Sake24, a daily national business newspaper)
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