Cutting costs to survive a recession: leave business insurance for last

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It seems as if 99.9% of South Africans are having the same conversation – on repeat – with friends, partners and colleagues. It centers around our collective anxiety about whispers of an upcoming recession, rising petrol and food prices, and what the uncertainty regarding global financial markets means for our standard of living, our jobs, and our business.
“We haven’t seen a squeeze on living standards like this for quite some time,” Keith Wade, Chief Economist at Global Asset Manager Schroders, explains in FA News last month. “We’re effectively at the early stages of an economic slowdown.” In fact, according to Fortune.com’s recent update
The [U.S] economy probably just plunged into a recession, according to a real-time data tracker used by a key Federal Reserve bank.
All the signs are there. We’re at the early stages of an economic slowdown and no business is immune to its effects. Luckily, however, most businesses have been forced to learn how to survive a recession all throughout history. In fact, some didn’t simply recover – they emerged stronger than before, outperforming competitors. Let’s let those success stories be our teacher.

Who will survive and who won’t?

A recent analysis by Bain discovered that the key difference between companies that survive a recession and those that don’t is preparation. When the economy is throttled and revenue falls, we naturally panic and look for avenues to cut costs. Fast. But if you act too conservatively and cut too many costs, you risk crippling the company’s chances at future growth. On the other hand, if you fail to act fast enough, you risk the survival of the company altogether.

This leaves business owners looking hard at their finances to see which non-essential expenses can be cut. Staffing, material costs and capital projects will all come under scrutiny.

But research continually points to the right way to act in moments like these: take some time to think when it comes to adjusting your coverage.

Your coverage is your peace of mind in stressful times

Yes, cutting your coverage costs might save you a couple thousand each year which could be allocated to rent or payroll instead. But before you reassess, make sure you weigh the potential cost savings against the potential cost of your worst-case scenario. Like being defenceless against a hefty lawsuit.

A recession is an incredibly risky time for your business and the safety net insurance provides is critical. Just as your business may be financially challenged, consumers may be out of work, burning through savings at an alarming rate. While most consumers wouldn’t do this, those desperate enough might grasp at any straw to ease their financial struggle. Including targeting your liability insurance policy.

Although you can’t insure your business against a recession, you can shield what you’ve built from the risks that threaten all businesses during an economic downturn.

Make sure that you have sufficient commercial property insurance, general liability insurance and business income insurance to protect your business from unforeseen circumstances like theft, fire and lawsuits. Depending on your business, you may also need other special endorsements like workers’ compensation insurance and commercial auto insurance.

If a large, upfront, annual premium payment is no longer viable for your company, our premium financing solution breaks annualised premium payments into more makes accessible monthly contributions, freeing up cash flow.

At Fulcrum Premium Finance, it’s our job to make sure your business has adequate coverage and ours is flexible by design. There’s nothing you can do to prevent a recession, but with the help of Fulcrum, you can ensure you’re prepared for all the twists and turns that life throws your way.

We are the largest premium finance provider in the South African marketplace. You can Get in touch with us ,let’s find a premium financing solution that works for you

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