Equipping small businesses is key to SA's long-term success

Around 70% to 80 % of small and medium enterprises (SMEs) businesses fail within five years, according to Professor Christian Friedrich of the University of Applied Sciences in Germany and Extraordinary Professor at the University of the Western Cape.

In a 2016 Moneyweb article, the professor reported on a 15-year research study undertaken by his team. Their research found that factors that strongly influence the success of SME owners were high levels of personal initiative, innovation, learning orientation and achievement orientation. Planning strategies such as goal-setting also had a high and positive correlation to success.

Planning strategies can help SMEs succeed

Prof Friedrich’s team then developed a training programme based on their research, which focused on resources, market barriers and concrete action strategies to effectively improve business operations.

The professor reported: “Six months after the training we compared the business success of the entrepreneurs who participated in the training with a control group (no training). The training group improved their turnover, profit and employed more employees, while the control group stayed the same. This is the first time it could be proven that with the right entrepreneurial training, one can not only improve the business success of small scale entrepreneurs, but also create employment.”

SMEs provide employment to 60% of the labour force

Healthier businesses benefit South Africa as a whole as they contribute to higher economic growth and employment. SMEs provide employment to 60% of the labour force, and so equipping SME owners to manage their business well is key to helping South Africa thrive. However, these businesses are often unaware of or underinsured for the risks they face.

Businesses today face a range of constantly evolving, complex and often intangible risks, driven by the pace of technological change. They continue to face physical risks such as property damage, but emerging risks such as reputational damage in a social media era are also increasingly becoming a significant cost to businesses.

With this in mind, Discovery Insure recently launched Discovery Business Insurance, a new product specially designed to cater for small and medium businesses (SMEs). The product offers powerful incentives and benefits to businesses to help them grow, reduce their insurance costs and manage their risks.

Access to a diagnostic tool and preferential service provider rates

What makes this product unique is the tools it offers to help entrepreneurs and management teams assess and improve the health of their businesses. All Discovery Business Insurance clients have access to a business diagnostic tool co-developed by Discovery and Endeavor South Africa, a not-for-profit organisation with 20 years of global experience supporting high-impact entrepreneurs.

The diagnostic tool helps clients to evaluate their business within key areas, such as their financial metrics, technology, operational efficiency, HR, legal, and governance policies, talent acquisition, marketing and access to capital. It then provides actionable insights and recommendations for SMEs, which helps them set ambitious but realistic goals that will drive them to success.

Clients are further equipped with access to preferential rates from a collection of world class service providers, such as Amazon Web Services for IT solutions and the Gordon Institute of Business Science (GIBS) to provide talent and skills development programmes.

A shared focus on building better businesses

“Better businesses drive economic growth and job creation,” says Catherine Townshend, Managing Director of Endeavor South Africa. “In partnering with Discovery we can leverage our global insights and methodologies to reach and support a wide range of businesses and help them to thrive.” Endeavor aims to catalyse long-term economic growth by selecting, mentoring, and accelerating high-growth companies that are ready to scale locally and globally.

Anton Ossip, CEO of Discovery Insure, adds, “We’re excited to apply our shared value model to Discovery Business Insurance. We believe this will create awareness of – and lower – business risks, and so help businesses achieve sustainable growth and contribute to the long-term success of our country.”