Business Analysts Reveal That 8 Out of 10 Small Businesses Fail within 2 Years. Here’s How Insurance Is Helping To Change That
Entrepreneurship is a risky plunge. According to leading global markets analysts, [i]Bloomberg, “8 out of 10 entrepreneurs who start businesses fail within the first 18 months.” This inherent risk in starting and operating a small business can be equated to a gamble, which amounts to putting your money and life on the line in order to be successful.
From the inception of their business, entrepreneurs expose themselves to certain risks that are enough to wipe out years of hard work and millions of Naira worth of investments. In Nigeria, SMEs are even more prone to suffer these risks, given the harsh economic and policy environment. Sadly, there is little or no safety net for promoters, when faced with business threatening scenarios.
Interestingly, the adoption of insurance (one of the surest ways to protect businesses from sudden financial losses) by SMEs in the country still remains low as only [ii]about 35% of small businesses are insured.
Why does your business need insurance?
Running a business with only an optimistic mindset can be disadvantageous, as the risks that threaten the existence of enterprises are forever lurking in the corners. Whether it is a catastrophic event that wipes away your assets or a damaging lawsuit, to mention just a few, failing to protect your business against risks leaves the promoter at the mercy of fate. But here is how insurance provides succour.
Insurance for founders and employees
At the initial growth stage of a business, the loss of a member of staff, especially key personnel, can affect your SME. However, with Life Insurance, Workers’ Compensation Insurance and Critical illness insurance policies, the organization is saved the burden of providing unplanned compensation or bearing the cost of unplanned medical expenses or lawsuits that might follow a deadly workplace accident. Even if you run a business that performs low-risk mechanical or electrical operations, slip and fall injuries could result in expensive legal claims.
Meanwhile, it is worthy of note that every SME with more than three employees is mandated by law to have insurance in place, to cover risks that may arise from employees’ death, disappearance, disability, or critical illness while in service.
Insurance for your business premises and content
The company’s properties and equipment are the costliest investments in the SMEs assets register. However, these highly expensive assets can be carted away by burglars or destroyed by fire outbreaks, natural disasters, flood or even malicious actions from adversaries. For a small business operating in Nigeria’s tough economic situation, such damages to assets can result in losses running into millions of Naira, which can threaten the survival of the affected business. By insuring your business premises and content, the cost of replacing these losses in event of any such unfortunate happenings are borne solely by your insurance company, thereby giving the SME another chance of survival.
Insurance for company vehicles
Vehicles are expensive assets that are susceptible to accidental damages and theft, in addition to its propensity to bring about liability to the firm when involved in accidental damage to other people’s properties. In 2017 alone, [iii]the Federal Road Safety Corp recorded 10,028 vehicular road crashes; this drives home the severity of this risk. The damages, loss and even death caused by the accidents and their financial consequences to affected SMEs can only be imagined. A comprehensive motor insurance for your company vehicles protects against theft, damage, fire and claims from third-party death, injury, and death.
Considering the numerous insurance blankets available for the various risks SMEs are open to, business owners must take advantage of this risk protection tool to avoid a major financial loss that may be due to a catastrophic event. The Leadway Business Owner Support Scheme (LBOSS) is one of such insurance policies designed to help protect SMEs. With a minimum annual premium of N92, 750, LBOSS bundles all the right covers for SMEs into one policy, and protects them against a variety of risks in one package.
L-BOSS offers five different levels of cover to help protect small and medium-sized businesses against various risks such as material damage to your business premises and their contents (e.g. computers, tv, furniture etc); insurance cover against fire, lightning, limited explosion, earthquake, volcanic eruption, malicious damage, strike, riot, flood, storm, impact; and burglary cover to all your business premises.
L-BOSS provides life assurance and death-on-service life cover for workers in fulfilment of employer’s obligations by the Pension Reform Act, while also providing cover for cost of medical expenses as a direct result of work-related accidents, as well as occupier’s liability insurance cover against possible legal suits as a result of injury suffered by visitors to your business premises.
Also, L-BOSS provides comprehensive vehicle insurance against theft, damage, fire and towing cost for vehicles operated by the business, in addition to up to N1, 000, 000.00 compensation in claims from third parties for death, injury or damage.
To find out more and get started with L-BOSS, call Leadway Assurance on (01) 2800 701 and 2800 700, or email: Lcs@leadway.com. You can also visit our website: www.leadway.com
[i] ‘Five reasons 8 out of 10 businesses fail’, forbes.com, 2013
[ii] “Your workplace should have employers liability insurance’, vanguardngr.com
[iii] “Road Transport Data Q1-Q4, 2017’, nigerianstat.gov.ng, 2017-2018