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Business News NSW Northern Rivers

Aussie small businesses at risk of underinsurance

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Aussie small businesses at risk of underinsurance
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Aussie small businesses at risk of underinsurance

Australian small businesses are at risk of underinsurance, with a recent report showing that many SMEs have become complacent and have no protections in place if a negative event were to occur.
Only 43% of small businesses think they are fully covered from insurable business risks, according to the newly-released bonus chapter of the Vero SME Insurance Index 2022.
While this shows a level of understanding among small businesses about their cover levels, 34% said they have no plan if something bad were to happen, the survey found. Some others haven’t even thought about what might happen or simply choose to cross that bridge when they come to it.
“Small businesses seem to be generally aware that they may be underinsured however due to the additional cost of increasing coverage some may have made a choice to not look further into their cover due to price concerns,” says Jane Mason, Head of Product Channels and Risk at SME insurance platform BizCover,
“What’s worrying is that the dangers of underinsurance can leave the insured in a worse situation if underinsured or not insured at all.”
The conditions are set for an underinsurance crisis
From floods, bushfires, and the Covid-19 pandemic to supply chain issues and the rising cost of living, Australian small businesses have had to contend with multiple problems in recent years.
This has had an impact on the revenue of many businesses, causing some to look for ways to save money.
Vero’s report suggests that SMEs with declining revenue are less likely to say that they are completely covered and are also less likely to have a plan in place for a negative situation.
“It’s tough out there. And unfortunately, some businesses put their insurance on the chopping block,” says Mason. “But what this also says is that the businesses who are more likely to be hit by underinsurance are already struggling.”
Exacerbating the issue is that rising inflation and major supply chain disruptions are pushing up the claims costs for insurance companies, which ultimately results in higher premiums across some types of insurance.
This can put businesses who are renewing their coverage at the same levels as the year before at risk, as the cost of equipment, stock or machinery has, in many cases, increased beyond what they were originally insured for.
“What was adequate cover a year ago may not be adequate cover now because of the rising cost of materials,” says Mason.
The risk of underinsurance
For Aussie businesses, what all this means is that some could be left with a serious financial crisis by not having enough insurance to cover their loss.
For example, say you insure your business for $100k and a fire rips through your store destroying it. Once you factor in the cost to repair your business, the total bill comes out to $160k in damages. That’s $60k you’ll have to pay out of your own pocket.
Another way you can fall into the underinsurance trap is by triggering a underinsurance clause.
These clauses are designed to discourage businesses from purposely undervaluing their assets and are triggered by underinsuring usually by 20% under the true value.
Importantly, this occurs even if the damages fall within the insured amount.
So, in the above example, even if the damages were only $40k, your insurer will not cover that full amount if the clause is triggered despite you having $100k of cover.
“Many people may think that the insurer will cover it since the cost of the damages easily falls within the insured amount but that is sometimes not the case if the business is underinsured,” says Mason. “If you purchase below what your business’ true value is, you could become responsible for the share of the loss and not receive full payment for your claim.”
What can small businesses do?
While the current situation is tough, there are some things Australian small business owners can do to avoid being underinsured.
Regularly scheduling some time to consider your exposure to risks could help avoid problems later down the track. This will allow you to consider what risks your business is exposed to and think about the possible scenarios that could happen if you weren’t protected in the event of a claim.
“It’s important to insure your business for an amount that is sufficient to cover not only the tangible assets, but the cost of repairs and any other variables that might leave you out of pocket,” says Mason. “After that, consider jumping online to compare quotes so you could then decide whether the price of the cover justifies the protection.”
While reviewing your cover at renewal is a great time to consider your options, you could check in at any point throughout the year.
And with inflation and the cost of claims rising, it’s become even more crucial to regularly keep track of the actual value of your building and business contents to avoid being left with inadequate cover if a claim were to arise.

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How Australian Women Entrepreneurs are Defying the Odds to Build Successful Businesses

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How Australian Women Entrepreneurs are Defying the Odds to Build Successful Businesses

 

One-third of Australian businesses are led by women, and this number is steadily increasing. Women entrepreneurs in Australia are not only more educated than their male counterparts but are also pioneering innovations in social impact and environmental sustainability. However, significant barriers persist, including gaps in opportunities, networks, resources, and investment.

Key Findings from the Women’s Agenda Report

A new report from Women’s Agenda, in partnership with Commonwealth Bank and CommBank Women in Focus, sheds light on the challenges and opportunities for women entrepreneurs in Australia. The report, which surveyed over 1,000 women business owners and startup founders in April 2024, highlights the following:

  1. Optimism and Determination: Despite the challenges, 75% of respondents are focused on expansion, and over half plan to hire new talent within the next year.
  2. Social Impact: A significant 56% of women-led businesses are dedicated to making a positive impact in areas such as care, health, social justice, and combating family violence.
  3. Economic Challenges: Inflation and the cost of living are major hurdles, with 74% citing these as primary challenges to growth. Additionally, over a third of respondents feel that current government policies negatively impact their businesses.
  4. Talent Shortages: More than one in five women entrepreneurs are struggling with finding and retaining talent.
  5. Gender-Based Barriers: Bias from prospective investors and unpaid care obligations are additional burdens for women founders.

Expert Insights and Strategies

Julie Mathers, CEO of Snuggle Hunny, sees current economic challenges as opportunities for entrepreneurs to become more focused on their businesses. She believes that surviving the current “storm” will make businesses stronger and more resilient.

Dr. Elaine Stead, a venture capitalist with Main Sequence, emphasizes the importance of networks. She advises women entrepreneurs to leverage their networks for support and survival during tough economic times. She underscores that the first priority for small business owners should be to survive the immediate challenges before focusing on growth.

Opportunities and Support Networks

The report highlights that access to networks is the top driver of success for female founders. Over 80% of respondents identified their biggest support as a network that includes other women entrepreneurs, stakeholders invested in their success, and supportive personal connections. This finding underscores the importance of relationship-building in business.

Conclusion

Despite facing numerous challenges, Australian women entrepreneurs are demonstrating resilience and optimism. Their commitment to innovation and social impact, combined with their determination to overcome barriers, is driving their businesses forward. The findings from the Women’s Agenda report reveal that with the right support, networks, and resources, women-led businesses can thrive even in challenging economic climates.

 

For more business news, click here.

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Fair Work Commission Upholds 3.75% Increase in Australia’s Minimum and Award Wages to Tackle Cost-of-Living Pressures

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Fair Work Commission Upholds 3.75% Increase in Australia’s Minimum and Award Wages to Tackle Cost-of-Living Pressures

 

In a significant move aimed at bolstering the economic security of Australian workers, the Fair Work Commission (FWC) has announced a 3.75% increase in both the minimum and award wages, effective from July 1. This decision, following extensive deliberation, reflects a multifaceted approach to address prevailing cost-of-living challenges while fostering equitable economic growth.

The national minimum wage is set to rise to $24.10 per hour and $915.91 per week, based on a standard 38-hour workweek. This increment, amounting to approximately $33 extra per week, is poised to benefit approximately 2.6 million workers nationwide, constituting approximately 20.7% of the Australian workforce.

The FWC’s decision is underpinned by a thorough assessment of prevailing economic conditions, with a keen focus on ensuring that wage adjustments align with forecasted wages growth for the year 2024. This strategic approach seeks to strike a balance between addressing immediate cost-of-living pressures and facilitating sustainable wage growth in the long term.

Furthermore, the commission’s rationale acknowledges the unique vulnerabilities faced by workers reliant on modern award minimum wages. These employees, often engaged in part-time, casual, or predominantly female-dominated roles, constitute a significant portion of those affected by the wage increase. By providing a modest real wage boost, the decision aims to uplift the economic wellbeing of these segments of the workforce, thereby fostering greater income equality.

However, the FWC’s deliberations also took into account the broader economic landscape, recognizing the diverse impacts of the wage increase across different industries and sectors. While overall labour market conditions remain robust, certain sectors face distinct challenges, necessitating a nuanced approach to wage adjustments to ensure sustained growth and stability.

In response to the ruling, stakeholders from various quarters have articulated their perspectives. The Australian Council of Trade Unions (ACTU) has welcomed the decision, hailing it as a significant victory for workers’ rights and economic justice. Conversely, business organisations have expressed apprehensions regarding the potential impact on operational costs, particularly for small and medium-sized enterprises (SMEs) grappling with existing margin pressures.

For SME owners like Edward Clayton, the wage increase presents a dual-edged dilemma. While recognising the imperative of fair wages to address cost-of-living pressures and retain a motivated workforce, he also confronts the challenge of balancing increased labor costs with maintaining competitive pricing strategies.

Against this backdrop, Treasury Secretary Steven Kennedy has emphasised the importance of ensuring that wage growth remains in line with inflation, thereby safeguarding macroeconomic stability. While the wage increase serves as a crucial mechanism to address immediate affordability concerns for workers, policymakers remain vigilant against potential inflationary risks, underscoring the imperative of productivity-driven growth to support sustainable economic outcomes.

As the wage increase takes effect, its ripple effects are poised to reverberate across the economic landscape, shaping consumer spending patterns, business operations, and overall market dynamics. While providing much-needed relief for workers grappling with escalating living expenses, the decision underscores the intricate interplay between wage policies, economic resilience, and the pursuit of inclusive prosperity for all Australians.

 

For more business news, click here.

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Business News NSW Northern Rivers

Enter the 2024 Lismore Business Excellence Awards

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Enter the 2024 Lismore Business Excellence Awards

 

The 2024 Lismore Business Excellence Awards are now open, inviting businesses within the 2480 postcode to showcase their achievements and contributions to the local economy.

Organised by Business Lismore, also known as the Lismore Chamber of Commerce and Industry, the awards aim to recognise and honour outstanding business achievements. These awards celebrate businesses that have persevered through challenges, embraced opportunities, and contributed to the growth and prosperity of Lismore.

Why Enter?

  • Recognition: Gain acknowledgment for your hard work and achievements.
    Networking: Connect with other business leaders.
    Promotion: Increase your business’s visibility.
    Validation: Validate your strategies and operations.

Categories

There are 23 award categories covering a wide range of industries, ensuring every type of business has the opportunity to be recognised. Categories include:

  • Retail and Personal Services
  • Trade, Construction & Manufacturing
  • Business & Professional Services
  • Health, Care & Wellness Industries
  • Agriculture & Primary Industries
  • Tourism, Recreation and Visitor Experience

Event Details

  • Date: 10 August 2024
  • Location: Lismore Turf Club

How to Enter

To enter, visit the Business Lismore website for application details and submission guidelines.

Final Thoughts

The Lismore Business Excellence Awards offer a platform for businesses to gain the recognition they deserve and contribute to the overall vibrancy and economic health of Lismore. Business Lismore encourages all eligible businesses, regardless of size, to participate and celebrate the collective success of the Lismore business community.

 

For more local Lismore news, click here.

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