If you run a small business and you’re the bread winner of the family, it only makes sense that you should protect your primary source of income – your business.
Insurance policies are an area that’s regularly overlooked by entrepreneurs or it’s one of the first areas that gets chopped or downsized in tough economic conditions.
But beyond this, Jannie Rossouw, head of Sanlam’s Business Market says that a vital component of bulletproofing your small business is to make sure that you don’t only focus on your business needs, but that you also pay close attention to your personal financial plan to ensure that you’ll still be financially sound if your business goes through a rough patch.
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“In many instances the business owner might be the primary or main income earner for a family. When the business owner falls sick for a longer period of time, is injured in an accident with a longer recovery period or has a heart attack, it might lead to the loss of existing business and the inability to attract new business because the business owner might be instrumental in managing client relationships,” Rossouw says.
The best place to start, says financial planner Mary-Beth Storjohann, is with disability cover,
“Many entrepreneurs overlook their need for disability insurance even though their ability to earn an income is their most valuable asset. Stop thinking ‘it won’t happen to me’ and know that it could,” she says.
“Ask yourself how your family would live without your income or what you would do for income if something happened to you. What are your options? Are you protected?”
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Rossouw says disability insurance should go hand-in-hand with some kind of health insurance cover whether it’s a hospital plan or a full medical aid plan as well as a life insurance policy.
It might seem a little left-field and one of the less desirable considerations, but you should also make sure that you have an up-to-date will and executable estate in the event of your death.
“Shortfalls and claims against the personal estate of the deceased business owner might necessitate the executor of the estate to sell-off assets to finance any shortfall or claims against the estate, he says.
While times may be a little hard, Rossouw says entrepreneurs should never stop planning and saving for their retirement by building an asset base outside of the business that they’ll be able to tap into should the business not succeed.