30 November 2016
Entrepreneurship is alive and well in Australia, but many people starting their own enterprises are failing to consider the importance of risk management. A new report released by REST Industry Super has revealed that there is a significant gap in the insurance practices of small employers across the nation.
Could your business be one of them?
What did the report find?
Only one in five SME owners believed their business would survive for a week in the event of their absence.
The report, titled Bridge the Gap, reveals some significant statistics about the small industry landscape of Australia. It found that entrepreneurs and mum-and-dad businesses are an integral part of the economy of our country, providing employment for 4.7 million people, driving 68 per cent of all jobs across the nation. More Australians are becoming their own bosses, and the recent tax incentives and cuts unleashed by the Federal government is likely to result in even more drive towards entrepreneurship.
However, they are also fundamentally unprepared for disaster. Only one in five SME owners believed their business would survive for a week in the event of their absence, while almost the same proportion had insufficient insurance to protect their own income for the same time period. Considering the importance that SMEs have on the economy of Australia, this is a dangerous level of risk for entrepreneurs to be living with.
Why is underinsurance a problem?
This report highlights the potential damage that the disablement of the business owner could have on their enterprise, but the reality is that the risks for small businesses are far wider than losing their founder. Navigating a ship without a captain is difficult enough, but then try to do it without a hull.
For example, CPA Australia demonstrates how staff, customers, suppliers, business premises, cyberattack, the market and competitors are all risk areas that need to be considered in a proper management plan. These are just to name a few. As important as a business owner themselves may be, the loss of a key staff member, a burglary or a particularly damaging hacking attempt could put a business on the backburner for weeks, if not months.
This is why every small business, whether it's made up of a sole operator or a handful of employees, needs to ensure they have a risk management plan and a suitable insurance programme. If you want to ensure you've got the right insurance in place to protect your business, get in touch with the team at Elders Insurance for a free policy review.