Entrepreneurs are shaping South Africa’s economy, and experts say they’re going to be critical to unlocking job creation and fostering the country’s growth. However, running a business of any size is tough. Many business owners are not always aware of the risks – business, financial and personal – that go hand-in-hand with their ambitious plans and ventures.
From cyber-attacks and business interruption to load shedding, political upheaval, or infrastructure failure (among the top 10 business risks in SA, according to the 2022 Allianz Risk Barometer), local entrepreneurs have many factors to consider to ensure continuity in their business. But *Kobus Kleyn, Certified Financial Planner at Kainos Wealth – one of Liberty’s affiliate partners – believes these concerns sometimes eclipse other important considerations.
“Entrepreneurs may not realise that sufficient protection doesn’t revolve around business risks alone. They must have the right insurance cover to insure themselves, their lives, and their legacies,” says *Kleyn. “As a person who not only provides jobs within a community, and where partnerships may be involved, there is a huge responsibility on entrepreneurs to ensure continuity of the company, business interests, and partnerships – as well as their family.”
He cites one of his own long-term clients as a prime example of how planning, or a lack thereof, could be the defining factor between success and failure of a financial venture.
**Thabo and his brother, **James were equal partners in a thriving family logistics company and approached *Kleyn for financial advice in 2001. **Thabo's personal health struggles were causing a major strain on the business, and prior to their business relationship with *Kleyn, the family had done very little financial planning.
“This wasn’t a simple case of ensuring the safety of the business. We had to consider personal, financial, and business needs planning. This then linked to **Thabo's estate, trusts, investments, insurance, and tax planning to create a holistic financial plan,” adds *Kleyn. “The complexity drivers would be dealing with the health issues during medical underwriting to obtain insurance cover for business protection against creditors, estate liquidity concerns and the family business.”
One of the most important policies in this instance, was life insurance cover. From a business perspective, life cover is a solid way to protect your company from financial loss, liabilities, or instability in the event of your death – providing cash flow to keep operations and suppliers satisfied.
When tragedy struck and **Thabo passed away when he was just 48 years old, it was a series of policies that not only kept the business intact for his employees’ sake, but also assisted **Thabo's wife and three children in securing their financial futures.
“The fact that we had Lifestyle Protector in place that best suited **Thabo's needs, when he passed away meant we could take care of his business interests, estate, and ensure his children and spouse were taken care of, and that his business partner could cope without him. Before he died, I could look **Thabo in his eyes and assure him he would not have to worry. It was a profound moment in my career as a financial planner,” says *Kleyn.
Key questions to ask to ensure protection
*Kleyn says that all entrepreneurs need to consider these 5 questions in order to have the peace of mind and certainty that their business and families will be adequately protected:
1) Do I have underlying or already present health challenges that could ultimately affect my business or ability to keep working?
2) Who are the people I trust to run my business in the event of my absence – specifically, who would I nominate as a key person?
3) In the event of my passing, are there processes, policies, and investments in place to preserve the legacy of my business as well as protect my family?
4) What are the policies I should be prioritising when money is tight?
5) Who should I consult on these issues to ensure my loved ones and business are protected?
These are some of the questions that financial advisers can help with.
What’s important is finding solutions that suit your business and personal circumstances, and not assuming that one size fits all.
“The ideal way to determine what works best for you as an entrepreneur is by finding or connecting with a financial adviser or broker that you resonate with so you can have a long-term relationship with them as your business evolves,” adds Nalen Naidoo, Divisional Executive for Liberty's Retail Solutions.
*The participant involved has not been compensated for his participation in this article. **To protect the identity of the policyholder, their real name was replaced.
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