Why your business needs cyber Insurance

May 12, 2022

Many small and medium-sized enterprises (SMEs) owners believe that they don’t have to worry too much about cyber crime. After all, why would internet villains bother with small fry when they could go after heavy hitters such as Yahoo, eBay or Uber?

Unfortunately, cyber criminals take an equal-opportunity approach. While they can and do target large organisations, they also realise such organisations have the resources to spend big on cyber security. It’s often quicker and easier for them to extort $1,000 from 1,000 small businesses they’ve infected with ransomware than to try to hack into a larger business in the hopes of earning $1 million. It’s the cyber attacks that devastate multinationals or large government departments, such as Petya and WannaCry that get all the media attention. But, without generating any headlines, tech-savvy crooks target millions of SMEs each year.

“Microsoft claims cyber crime now costs the global economy around US$500 billion (NZ$776 billion) annually and that 20 per cent of SMEs have been targeted by malicious actors”

What is cyber crime?

Cyber crime includes all of the following:

• identity theft;

• cyber stalking;

• use of malware;

• use of viruses;

• computer and network hacking;

• online scams;

• phishing scams;

• fraud;

• information theft; and

• extortion.

Everybody who uses a computer– or even just a mobile phone or iPad – for work purposes can be a victim of cyber crime.

What happens if my security is breached?

The two cyber crimes SME owners most need to be worried about are ransomware attacks and data breaches. A ransomware attack involves a business’s files being encrypted and thus rendered unusable. In the digital age, this can quickly result in operations grinding to a halt, which, in turn, soon means revenue stops flowing in. Business owners often pay a substantial but not excessive ransom (the average demand is around $1,000) to have their files unencrypted. In the case of a data breach, the cyber criminal steals data (think addresses and bank account details) about a business’s customers or, more rarely, staff. This data is then used for identity theft, fraud or extortion.

In the past, a SME that failed to safeguard the personal data it was entrusted with typically only had to worry about suffering reputational and legal consequences in the event word of the data breach got out. In February, in the US, the Federal Government introduced the Notifiable Data Breach (NDB) scheme. As the name suggests, this requires organisations, including businesses, to notify individuals affected by data breaches likely to result in serious harm. Failing to comply with the NDB scheme can attract fines of up to $2.1 million. Of course, complying with it could result in your clients making legal claims against you. At the very least, those clients will not be inclined to place their trust in your business in future. This law, or something like it , could be enacted in New Zealand , in the future.

But I’ve got a firewall!

It’s both possible and advisable to minimise the risk of a cyber attack. This is done through some combination of the following:

• installing reputable anti-virus programmes;

• having secure data back-ups;

• Ffrewall technology;

• data encryption; or

• introducing and enforcing sensible policies around the use of equipment (especially BYOD gear) such as laptops and smartphones.

Unfortunately, even if you do have all the right systems and software in place, your business is still at risk. If major banks, governments, and even Google, can fall victim to cyber attacks, anyone can.

What does cyber insurance cover?

Fortunately, while you can never be 100 per cent sure your cyber security won’t be breached, you can insure against the costs that often arise in such a situation. A cyber insurance policy can cover you for expenses related to the following:

• interrupted business;

• hiring negotiators and paying a ransom;

• recovering or replacing records or data;

• liability and loss of third-party data;

• defence of legal claims;

• copyright infringement;

• misuse of intellectual property online;

• crisis management and monitoring; and

• prevention of further attacks.

OK, what do I do now?

If you’d like to learn more about cyber Insurance please contact one of the Insurance Design team to discuss what your needs may be.

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Top eight things to outsource in your business

By Ian Fenwick • 16 Sep, 2022

If you’re looking to scale your business, you’ll need to spend more time working on it than in it. Finding ways to leverage your time is critical, and outsourcing your least favourite tasks is a great way to do this. Things you should consider outsourcing in your business: 1. Digital marketing. From your content strategy to your social media accounts, if this is not a strength of yours, outsource it! There are many freelancers who have multiple clients at this level, who’ll likely be more knowledgeable regarding SEO and much more effective and efficient in general. 2. Graphic design. Your brand is a key reflection of your product offering. If you don’t have the skill, software, and time to do this well, you’ll potentially damage your brand. 3. Scheduling and administrative tasks. A ‘Virtual Assistant’ can help you manage anything from your appointments to flights, emails, and beyond (virtually anything admin). At a lower level, consider adopting software that’ll automate or minimise processes, such as self-booking appointment apps where your clients can schedule a meeting with you, e.g., Calendly. 4. Customer feedback. Many businesses miss this valuable opportunity to connect with customers and improve their experience. A ‘Virtual Assistant’ can help, but there are also apps (such as Ask Nicely) that automate the process of asking for feedback; directing positive responses to leave you Google reviews and negative responses back to you to quickly resolve! 5. Inventory management. Too much stock can cause cashflow issues and affect sales price (due to resulting discounting), but not enough equals lost sales. Outsourcing inventory management can help you minimise stock-carrying costs and allow you to focus on more important things. 6. Payroll. This task is best left to the professionals. Outsourcing payroll will minimise the risk of inadvertently getting it wrong, while saving you time and, most likely, reducing the cost of this task. Utilising a payroll product is another great option. 7. Bookkeeping. Do bookkeeping tasks often infiltrate your evenings or weekends? Does the stress of these tasks piling up occupy your mind? Outsourcing these tasks (and the stress) to someone else can be liberating and cost-effective. 8. Virtual CFO. If you find budgeting and forecasting a struggle, a ‘Virtual CFO’ can wear this important hat for you. They’ll monitor the financial health of your business and provide a fresh perspective which will help you make better strategic decisions and improve your results. Tempted to start outsourcing some of your tasks to free up your time? We can help by taking the last three roles off your hands! We work with a number of our clients in this way, allowing them to focus on what they do best. While outsourcing takes a little bit of setting up, it’s worth the short-lived pain for massive gain. We don’t have to be jacks of all trades. In fact, this thinking often leads to begrudgingly doing many things poorly rather than doing a few things really well – and enjoying doing them. Work to your strengths, outsource the rest! Need help? Get in touch.

Five accounting tips to give you more time to focus on your business

By Ian Fenwick • 15 Sep, 2022

Very few people love the accounting aspects of their business. Here are a few ideas to keep your clients and suppliers happy while streamlining processes for yourself. 1. Create realistic estimates. This will help you keep clients happy and expectations in check. Have a look at past projects, add up the costs, and compare to current requirements to get an accurate picture of how much to charge. 2. Simplify time recording. When timekeeping is a chore, it’s hard to keep up with it. There’s now very useful software that makes it simple to enter time and switch between jobs. 3. Get reimbursed for expenses. If there are likely to be expenses on a job, let the client know at the start. Then, when you make sure you’re reimbursed for them, clients won’t mind. 4. Stay on top of cash flow - and get access to credit. Keeping a close eye on your cash flow means you can plan for the future - even when the whims of clients can make that uncertain - and you’re much more likely to have access to lending if the bank and other creditors can see there’s money around the corner. 5. Minimise payroll work for your ever-changing staff and freelance roster. Keeping payroll simple and integrated with your accounts means happier staff and better cashflow forecasting. Freelancers need consistency more than anyone, so pay them promptly to be sure you always have access to top talent. With the right technology in place, many of these tasks can be automated so you can get on with your job. We can help you build a system to manage all of the above.

Is your cost of sales affecting your gross profit?

By Ian Fenwick • 14 Sep, 2022

Do you know how much it costs you to produce each product or service in your range? The better you understand this cost of sales – or cost of goods sold (COGS), as it’s more commonly known – the more ability you have to control your company’s profitability. When you know your COGS, you can set the right price point, control your profit margins and ensure that you’re maximising your gross profit. But to do this, you need to understand COGS and how it impacts on your financial management. Understanding your COGS To take one of your company’s products or services from inception to delivery, you will incur a number of costs. For example, if you’re a manufacturing business, these costs might include buying in raw materials, direct labour costs, the overheads for running the machinery in your factory, the costs of delivering the products, and the sales and marketing expenses needed to sell the product to your target customers. For you to manufacture a finished product and to generate a sale, all these costs are a necessary part of the process. They’re the direct costs of producing your goods for sale. You calculate your COGS number for the period by looking at the value of your opening stock (or inventory), adding the cost you’ve incurred to produce the goods, and then, subtracting the value of the closing stock balance. The COGS formula looks like this: Opening Stock + Purchases - Closing Stock = COGS So, if you started with an inventory of $10,000, this is how you’d calculate your COGS: Opening Stock: $10,000 Purchases: $25,000 Closing Stock: $8,000 COGS: $27,000 Reducing your COGS to boost gross profits The more sales you make at a given price, the higher your revenue (income) will be. Deducting your COGS number from your revenue figure gives you your gross profit – and gross profit is a key metric for tracking the health and profitability of your business. A high COGS number reduces the size of your profit margin, and, in turn, a small margin will start to have a negative impact on your gross profit. Being able to control and manage your COGS, and its impact on your gross profit, is a vital skill for any product-based business. Here are some ideas for improving the profit impact of your COGS: Reduce your supplier costs – If you can reduce the size of the purchases made to produce your goods, that means less expenditure and less impact on your profit margins. Try shopping around for cheaper suppliers, or negotiating better prices with your existing suppliers to bring down costs. Streamline your production process – the more complex your production process is, the more overheads and production expenses there will be. Taking a lean approach helps you to continually evolve your processes and remove the extraneous elements – cutting costs while still delivering a quality product. Increase your prices to boost your margins – if your COGS number is eating into your profit margin, one way to resolve this is to increase your price point. This will help to increase income and boost your margin but does require caution. If prices get too high, this can damage existing customer relationships and make you uncompetitive in the market – so think carefully about any price increases before taking action. Talk to us about improving your gross profit If you want to boost your gross profit and get COGS under control, come and have a chat with us. We’ll look over your expenses and overheads, and will look for the opportunities to reduce your goods-related purchases and push for a better profit margin on your products.