July 16, 2024

Insurers play instrumental roles in helping SMEs tackle operational challenges

4 min read

Small business owners in South Africa currently face a multitude of challenges, and are required to overcome daily obstacles – a weak currency, an ongoing electricity crisis and less than favourable economic conditions, to name a few – in order to keep their small and medium enterprises (SMEs) afloat and profitable. Entrepreneurs certainly have their work cut out for them.

Fortunately, by having the correct partners in place to lean on during tough times, a small business can shift focus from administrative tasks to strategies that will actively grow their ventures. 

This is according to Jason Mellow, head of Business Insurance at MiWay, who explains that often an untapped resource for small businesses is their insurer who can offer SMEs much-needed support. He says the in-depth knowledge and insight that insurers have on their clients’ businesses puts them in the ideal position to provide informed advice.

“With the right insurance partner, small businesses can leverage their relationships to gain access to the broader support service ecosystem. While not all insurers supplement their offering with value-added services, those who do can help their clients save valuable time and resources.”

Tax compliance for businesses

One of the greatest administrative challenges faced by local SMEs is navigating a complex and intricate regulatory system. An example of this is tax compliance. Within the current regulatory framework, SMEs in South Africa could be liable for up to 11 different taxes, some of which include provisional tax, value-added tax, donations tax and employment-related levies.

Each of these taxation types requires the timeous submission of specific documentation and financial records. When these requirements are not adequately met or information is found to be misrepresented – whether intentionally or erroneously – small business owners could be held liable for fines and penalties. SMEs that do not file their returns correctly could also stand to lose out on extra revenue linked to claimable deductions as well as several incentives offered by the government. 

Mellow explains that the complicated nature of tax compliance, particularly for SMEs, as well as the cost of hiring external professionals to facilitate the process, is what prompted MiWay to enhance its offering to include tax-related support services. “Through an added support service, SMEs can gain access to a comprehensive suite of preferred partners who can advise on tax and other key business functions.”

Furthermore, business insurers are also positioned to offer SMEs support and advice on how to mitigate tax-related risks. “As risk management specialists, insurers can provide small businesses with insight into how tax compliance is regulated and enforced in South Africa. In acting on this insight, SMEs can avoid unnecessary fines and penalties imposed by SARS for the late submission of tax returns, the submission of inaccurate or fraudulent information, and tax evasion,” adds Mellow.

Optimising marketing spend

Access to a wider support network could also help SMEs reduce their operational costs. Ultimately, this is what insurers should help their customers focus on achieving: opening up communication channels and unlocking tools that will help business owners optimise their cashflow. Some of these costs may be more significant than entrepreneurs realise, with marketing being a prime example.

Marketing in the digital age requires SMEs to be in many places at once, considering their competitors may already earn a share of voice in areas such as social media, content marketing, search engine optimisation and email campaigns. In an environment in which there are multiple avenues to explore, business owners are tasked with selecting the right combination of strategies to maximise their return on investment.

“In small businesses, it all comes down to the bottom line, which is why one of our main focus areas is helping businesses develop their online presence to achieve key metrics such as higher traffic volumes, better conversation rates and more engagement. By providing this support, we help entrepreneurs focus on other areas such as refining their value proposition, crafting their key messaging and focusing on the finer details,” says Mellow.

Tenders as a way to scale operations

Consistent and strategic growth is crucial for small businesses in highly competitive marketplaces. The path to achieving this objective may involve finding ways to develop better, more efficient products and services, onboarding new customers, retaining existing ones, and pursuing opportunities to scale. Very often, this is where local entrepreneurs really shine at what they are truly passionate about. And, as Mellow explains, sometimes a prompt on which direction to take can make all the difference. 

“The SMEs in our MiBusinessAssist network receive tender notifications related to their industries as well as support in completing the relevant documentation. In South Africa, winning tenders is one of the more effective ways that small businesses can grow by becoming large-scale suppliers to government departments. For many SMEs, it is a fast track to a greater level of growth. When we provide support in putting together professional tender documents, we allow entrepreneurs to focus less on the admin component and more on translating their broader vision into practical action points.”

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