If your business lost an owner through death or major illness or you lost a key person that was critical to your business functionality, wouldn’t it be reassuring to know you were protected financially?
We can help you look at the risks your business might face and what you can do to protect it.
Losing Key Staff
The loss of a key person – anyone who contributes to the revenue of your business – can seriously affect your ability to maintain your business’ value. It’s obviously difficult if the loss is through death or disability, but you also need to prepare for resignation and retirement. The loss of a key person can affect your business through;
- loss of revenue
- failure to meet financial obligations
- increased costs (such as recruitment)
Key Person Protection
All businesses should plan to reduce their key person dependency over time, but most businesses don’t have this luxury. By taking key person insurance, your business receives a lump sum payment if a key person can no longer work because of illness, injury or death. Key person protection can help you meet your short-term business obligations, offset the effect on profits and help provide the funds to find and train a suitable replacement.
Losing A Business Owner
Business owners need a plan to ensure a co-owner’s departure is as smooth as possible. A business owner could die, get sick, resign or retire – so it pays to be prepared.
What plans can you put in place?
There are plans you can put in place to manage the planned or unplanned loss of a business owner. They ensure your interests are protected, and you retain control and maintain the value of your business.
- Key person protection – see above
- Buy / Sell Agreements – these allow the remaining owners to purchase the departed owner’s shares at a pre-agreed value. This value should be reviewed each year to ensure it keeps pace with the changing value of the business.
- Buy / Sell Funding – wherever possible, the Buy / Sell Agreements should be fully funded to avoid delays and avoid remaining owners being out of pocket.
Want to know more? Contact Us for more information on the types of risk protection we can provide for your business