Section 14 · Business Plan
Risk Management Framework
The following insurance policies will be maintained to protect the business against insurable risks:
14.1 Risk Register
| Risk Category | Description | Likelihood | Impact | Mitigation Strategy |
|---|---|---|---|---|
| Regulatory | Changes to trading hours, licence conditions, or outright sales bans (as experienced during COVID-19) | Medium | High | Maintain full compliance; build cash reserves for 3–6 months of fixed costs; diversify revenue streams |
| Competition | Entry of national chain stores into the immediate trading area | Medium | Medium | Differentiate on service, community engagement, and loyalty; maintain competitive KVI pricing |
| Theft & Shrinkage | Internal and external theft leading to inventory losses exceeding 2% of COGS | High | Medium | Comprehensive security infrastructure, daily cycle counts, zero-tolerance policy, CCTV |
| Supplier Risk | Stock-outs or supply disruptions from key beverage producers | Low | Medium | Maintain relationships with multiple distributors; hold 4–6 weeks of safety stock on top-selling SKUs |
| Economic Downturn | Reduced consumer spending due to recession, unemployment, or inflation | Medium | Medium | Maintain value-tier product range; increase promotional activity; reduce discretionary costs |
| Key Person Risk | Incapacity or departure of the founder/MD | Low | High | Document all processes; train Store Manager as succession candidate; maintain key-man insurance |
| Cash Flow | Working-capital shortfall during ramp-up or seasonal troughs | Medium | High | Conservative financial projections; maintain R350,000 working-capital buffer; negotiate favourable supplier terms |
| Community Opposition | Objections from residents or religious organisations affecting licence renewal | Low | High | Proactive community engagement, responsible trading, employment of local residents, sponsorships |
14.2 Insurance Programme
The following insurance policies will be maintained to protect the business against insurable risks:
| Policy Type | Coverage | Estimated Annual Premium |
|---|---|---|
| Commercial Property Insurance | Premises contents, fixtures, and fittings against fire, flood, and vandalism | R12,000 |
| Stock Insurance | Inventory against theft, fire, and accidental damage | R10,000 |
| Business Interruption | Lost revenue and fixed costs during forced closure (up to 6 months) | R6,000 |
| Public Liability | Third-party claims for injury or property damage on premises | R4,000 |
| Employer’s Liability | Workmen’s Compensation Fund contributions | R2,000 |
| Key-Man Insurance | Life and disability cover for the founder/MD | R2,000 |
| Total Annual Premium | R36,000 |
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