Every business owner is likely to have considered insurance for accidents, company vehicles and their premises. However, many do not feel business protection is relevant to them.
Small business owners are often too busy to focus on the wider ‘what if’ risks their business could face.
Protecting business profits
Can a business die of a heart attack? The impact of losing a key person in a business can be catastrophic. This could be due to a loss of contacts, revenue or costly recruitment fees. Furthermore, costs can be exacerbated if there are business loans in place particularly true if a business owner has provided a personal guarantee. Without protection in place, this could quickly result in the death of the business.
Recruitment and retention of staff
Employing the right staff can be critical to the success of a business. While employees are less likely to leave in an economic downturn, an upturn can mean they will look somewhere else. Employees who feel valued are also likely to be more productive.
Ensuring the company employee benefits is competitive can help to both attract new talent whilst also retaining existing experienced and knowledgeable staff. This could include benefits providing financial support in difficult times, such as income protection, critical illness and life insurance. It could also include others which promote good health such as medical cover.
A company could also consider a tiered approach. This could include offering more specialist plans such as Relevant Life Plan or Excepted Group Life scheme specifically for more senior or specialist employees.
Keeping control of your business
A business may not have debts or key people. But they should all have a shareholder or partnership agreement in place clearly setting out what would happen on the death, illness or disability of a business owner.
Generally speaking, on the death of a business owner the beneficiaries of the estate will usually be their family. However, they may have no experience in running a business, and/or may not have a desire to contribute. As such they are likely to want to sell their interest, but without a plan in place for the surviving business owners to fund the purchase, this can be far from a smooth transition. Shareholder or partnership protection is critical to ensuring that the business can continue with minimal interruption.
