Insurance ought to be treated as the most important aspect of any business.
All businesses regardless of how diligent or smart we work are inevitably exposed to risk.
The purpose of insurance is to mitigate losses in the event of an accident.
Murunga’s business was doing well until a series of tragedies hit him hard. His truck was involved in an accident, one of his trusted employees stole his money and disappeared, and his wife was admitted to hospital with labour complications.
The time he spent away from business attending to his sick wife was like adding salt to a wound. It took a toll on his business and sales plummeted.
He did not have any insurance and that meant repairing the truck, footing the hospital bill and taking the loss from the employee theft. This messed his business and led to loan default, delay in paying bills, servicing customer orders and lots of stress.
Well, Murunga’s case is not an isolated one. Many small and medium businesses (SMEs) are either not insured or underinsured. This is a fact. Many of them only insure their business if it is a legal or financing requirement.
However, insurance ought to be treated as the most important aspect of any business. It is not just an unnecessary expense to a business but an essential investment that may determine the fate of business should a calamity strike.
All businesses regardless of how diligent or smart we work are inevitably exposed to risk.
Many business people cross their fingers and pray nothing will go wrong. This is doing business recklessly and exposing oneself to unnecessarily life-threatening risks.
The purpose of insurance is to mitigate losses in the event of an accident. However, most insurance companies have products that do much more than mitigate loss; they also protect the livelihood of business owners and their employees.
With good insurance planning, you can safeguard your business and your hard-earned savings and investment and have peace of mind and security that is priceless. Planning for the unexpected is one of the keys to a successful business.
The fundamental purpose of insurance is to help the insured minimise risk, safeguard assets and protect their interest from a multitude of unforeseen circumstances. This may include accidental damage or loss of property, liabilities arising from employee acts, theft, health and employees’ lives.
Therefore, insurance is not an unnecessary cost to the business. It is an essential element that helps businesses save money. It is clear that individuals and businesses without suitable insurance coverage ultimately will spend more money to pay for unplanned losses, damages and sickness to their business and employee. This affects the overall financial capacity in the long run.
The choice of insurance package largely depends on individual person or business exposure. You need a proper risk analysis plan to establish risk areas and the effect such risk would have on your business in order to know what you really need.
The insurance will determine your premium depending on your risk levels and that is why the cost of policy varies with factors such as age and the number of insured in case of group cover.
It is advisable to get the help of an independent financial or business adviser to help you decide on the extent of insurance coverage you need for your own safety and that of the business.
Mr Kiunga is author of ‘The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market’
