Important Thoughts for Business Owners

As a business owner, you probably have no hesitation in buying anti-virus software and back-up systems for your IT. And you no doubt, insure your car, home, business premises and business equipment.

But what about the most important people in your business – the owners and key employees?

If a business owner or key staff member was to suffer a debilitating illness or accident and couldn’t work for a long time (or forever), or if they were to die prematurely, what happens?

• The business may or may not continue to operate
• The bank may call up overdrafts
• The company’s credit rating may be impaired
• Significant projects may be jeopardized with financial consequences
• More money may be required to buy professional replacement help
• Plus lots of disruptions to business operations
• What about the welfare of loyal staff and continuity of their jobs?
• Does this mean your retirement fund (your business value) is lost forever?
• Does your spouse know how exposed your family is and the level of potential risk to your family’s lifestyle?

All of this may need to be financed by you or your organisation, or…

Maybe there is a cheaper alternative – that is, to have an insurance company pay the bills!

So let’s focus on the key concepts. If we can agree that the objective is for the business to be maintained in a similar situation as it was prior to the death or disability of a business principal or key person, there are four primary risk management issues that the business owners need to consider.

1.Debts

You or your entities (companies and trusts) may have Business leases, Director’s loans, guarantees you have provided, bank debts or an overdraft. In many cases personal assets would be in jeopardy if these debts weren’t paid out.

2. Payroll

You or your key employee may need to be paid out unexpectedly – long service leave or retrieval of a company car used by the family. You may feel you have a moral obligation to continue to pay an owner or key person’s family a lump sum or continue paying a salary for some time.

3. Revenue

A key person with skills, knowledge, experience and leadership could be a significant revenue generator. The loss of a key person or owner can greatly affect revenue, profit, company value and the very existence of the business as a going concern.

4. Ownership

Would you like to guarantee the retained value of your business? How important to you is an orderly, equitable transfer of ownership? Do you really want your spouse or child/ren owning your share of the business?

You’re probably thinking this won’t happen to me!

Blue Chip Wealth has delivered enough insurance company cheques over the years, to know only too well that death, disability and traumatic health events occur in ALL age groups and both genders – it’s a lottery!

People with a family history of disease and shortened life are undoubtedly more susceptible to these life impacts – we can show you the statistics if you like – and we’ve experienced the heartache and disaster stories.

We don’t have to be all negative about it though…

Like any unknown situation you need a sensible ‘Risk Management Plan’. This is too important to ignore!

Right now you may be risking a lot more than you thought you were, or you may never have even given it a thought!

Don’t delay! Call for a confidential discussion with a business owner who knows… call Graham on 02 8188 0148 (Sydney) or 0414 583 558 (Kingscliff)

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