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Becoming a Mom – How Will Your Business Cope?

By Bev van Nijkerk, 14 May 2019

After spending time, energy and money building up a successful business, taking the decision to start a family can be a scary one for prospective ‘momtrepreneurs’.

What will happen to the business if you take time off? Will your clients be prepared to wait around? Will a competitor seize the gap and grab your market share? Bev van Nijkerk, segment specialist for Sanlam Young Professional Market, looks at what you need to consider.

To start with, ‘momtrepreneurs’ should ensure they’ve considered all the facts and scenarios carefully. “You can’t make an informed decision without first speaking to your financial planner, your accountant, your business partner and your family about the potential impact of taking some time off. What’s going to happen to your cash flow if you aren’t there for a few months? Will your clients be understanding? You need to weigh up all the options and then decide what both you and your business can realistically afford,” says Van Nijkerk.

Next, Van Nijkerk suggests drawing up a proper maternity leave plan outlining a course of action for your business. The sooner you can do this, the better – ideally even before falling pregnant, when you still have lots of time to prepare. Things to include:

  • What your role will be in the business. Are you going to cut all ties (this is not advisable), or will you continue to do some work from home? Is there someone in the business who can take over from you, or are you going to employ a replacement? What will your level of involvement be, and what do you want to be told about?
  • Clear levels of responsibility and authority. Who is going to report to who when you are not there? Who is going to manage the finances, payments and general cash flow of the business?
  • How and when you will tell your clients. At some point, your clients will need to know that you may not be there for a few months. You need to reassure them that it will be business as usual while you are away. If someone is replacing you, you’ll have to do a proper handover and introduce this person to your key clients.

Besides a plan for your business, you’ll also need your own personal financial strategy – it’s best to draw this up in consultation with your financial adviser. Here, you’ll need to consider:

  • Whether or not you’ll be taking home a salary. If you have business partners, will they be happy if you take home your full monthly salary while you are not working?
  • Whether or not you qualify for unemployment insurance. Check with your accountant whether the way your business has been set up allows for claims from the Unemployment Insurance Fund (UIF) while you are on maternity leave.
  • Continued payment of policy premiums. Not keeping up your retirement annuity premiums is the worst thing you can do. Many retirement funds have penalty clauses if you stop or reduce payments, and over a longer term, the compound interest you’ll lose out on can be significant. With regards to your risk policies, ask your financial planner to check whether there may be any waivers on premiums while you are on leave. If there aren’t, you’ll need to make provision for your premium payments in your financial strategy.

“The bottom line is that you need to plan, plan, plan. Don’t rush into anything before you’ve made proper provision for both your business and yourself. Whether or not you can take time off and for how long, and taking care of the financial implications involve making informed decisions. You essentially have two ‘babies’ to consider – your business and your baby. Make sure they both receive the attention they deserve,” Van Nijkerk concludes.

Sanlam Life Insurance is a licensed financial service provider.
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