Load shedding is now the number 1 enemy of South African businesses, but here’s why you can’t let it win the war
Load shedding is silently killing South African businesses. One by one, small and medium businesses are disappearing from our streets and shopping centres as the fragile power grid and frequent rolling blackouts over challenge business owners, entrepreneurs and employees. Retailers, hospitality businesses and manufacturers are hit the hardest.
Another truth bomb is that many South African business owners cannot afford generators. And those bigger businesses that can are faced with the risk of running out of back-up plans i.e. diesel.
Most retailers cannot trade in the dark, and so they are forced to close their doors during load shedding. The darkness is music to the ears of criminals as they become invisible, which could affect your company’s security measures and impact safety on your premises.
Unfortunately, there doesn’t seem to be a light at the end of the tunnel yet. Rumours about Stage 6 load shedding, which could mean up to 10 hours a day without electricity, cause fear among South Africans and they ask how they will make a living and survive in our beautiful country.
Despite all the silent killer’s challenges, we cannot merely sit back and wait for it to destroy the companies that keep our country and economy afloat.
You can do something to keep your business alive
To give your business or your employer’s business the best chance of staying alive there are a few things you can do.
For starters, every business must have a contingency plan for blackouts.
Firstly, establish how exactly inconsistent power will impact your business.
Secondly, review your insurance and lastly reduce the risk of not being prepared financially.
Here’s how to set up your contingency plan
- Be clear on what you will do when the electricity cuts out.
- If your business does not rely on passing trade during specific times in the day, is it possible for your organisation to produce or provide a service around load shedding schedules?
- Better the devil you know than the devil you don’t. Work out how much it will cost you if you must start up machines again, for example, additional electricity, process interruption, wastage costs and maintenance costs.
- Your overheads will not get any cheaper. Due to load shedding, you might need to consider price increases to supplement your income to make provision for business continuity expenses.
- Invest in backup electricity supply such as generators, solar power, batteries, power banks or UPS systems if you can. There are many solutions to generate backup electricity. So, it is best to obtain expert advice as to what type of solution would cater to your needs.
- A professional must install generators to ensure municipal compliance and safety. If a large quantity of fuel is stored on your premises, it needs to be secured and locked in a ventilated room.
- Check your insurance policy to ensure policy requirements for generators are complied with, as failure to do this could result in an invalid claim because of incorrect use or installation.
- Back up your business information daily on a secure cloud-based server. The financial and legal implications of the loss of data can cripple your company.
- Back-up batteries must be installed and maintained if you secure your premises with an alarm, motorised gate, electric fence or electronic safety boom. Test your alarm twice a year with your alarm company to verify your alarm is in tip-top condition as load shedding may cause your alarm to send out false signals or malfunction altogether.
- If possible, switch to solar lighting or battery-operated lighting to keep your premises lit up.
- Prevent damage by installing surge protectors and unplugging computers and any electronic equipment and appliances that may be vulnerable to power surges. Inverters can power critical equipment such as cash registers and point of sale equipment.
- Inspect your wiring as substandard or faulty installation can worsen power surge problems. Have a qualified electrician inspect your building’s wiring for any possible issue, especially older buildings. If you rent business premises, make sure your lease contract stipulates that your landlord is responsible for electrical compliance and maintenance.
- Secure your premises as much as possible. Make sure your premises are locked up when the power goes out to reduce the risk of opportunistic theft. Ask your alarm company to do more frequent patrols during load shedding.
- Communicate regularly with your suppliers. Choose suppliers who have sufficient backup and recovery plans for load shedding to minimise the impact on your business and operations.
- Check if the delivery address has power at their premises beforehand to establish whether the delivery should go ahead. Some customers may not be there to receive the goods. Perishable goods may spoil if the business doesn’t have alternative storage facilities.
- Run a tight ship during spells of blackouts with your team by setting clear objectives on scheduled load shedding days and, if possible, move lunch hours, opening or closing times around.
Now is an excellent time to revisit your insurance cover and speak to your broker to ensure that you keep the lights on.
When speaking to your financial advisor keep the following important facts in mind:
Most policies contain in its contents an alarm requirement in the event of theft or burglary at your business premises. Should a burglary happen when the power is out and causes your burglar alarm to fail, you may not have cover unless you specifically requested such cover in writing.
Generators permanently installed are considered a fixture under your Buildings policy. Therefore, it will be covered automatically under the Building’s section, if the building is an insured item in which case it will be considered part of the building structure. Portable generators can be added under the Contents section of your policy.
Insurance cover is also available for the breakdown of your generator. You have the option to extend your insurance cover to include the deterioration of your stock following the breakdown of your generator.
Power surges may occur during load shedding, potentially damaging your equipment. When electricity returns after an extended outage, it sends an increased flow of current to a wall socket or an electrical box.
A further contingency plan is business interruption insurance. This cover can be the difference between surviving or closing your doors after a devastating interruption to your business. Some policies will cover load shedding while others will not, so be sure to check before signing on the dotted line.
Policyholders are reminded, ultimately, it is their responsibility to check the cover on their insurance. Score some brownie points when you claim by being pro-active and responsible!
Article written by Yolande van Niekerk