Can your business survive the death of a business partner?
Research shows only 12% of business owners have a written business plan that deals with the death or long term illness of a business partner.
Yet, in Australia today, nearly 31% of these business owners are over 50 years of age, and many more are approaching traditional retirement age.
From accidents alone, 13 people are killed in Australia every day, and many more die unexpectedly. Despite this, most businesses haven’t planned adequately to ensure that they continue to function if a business partner was lost to death or a long-term illness.
Consider: if you or one of your business partners dies or becomes disabled:
- Could the remaining partners work with the partner’s nominated beneficiaries?
- Would the remaining partners have the funds to purchase the deceased’s interests in the business?
- Could the surviving partners take on a new partner?
- Would they want to?
- Would the value of the business stay the same?
If your answer is ‘no’ to any of these questions, you need to consider succession planning for the security of your business.
Austcover can provide the services and advice of a business succession planning specialist. The Plan will tackle issues such as business value, debt elimination, loss of goodwill and surety of fund distribution through a legal agreement that is tax effective and ATO approved. Further evidence of how we Advise, Assist and Assure.
Key Person Protection
Keep your business going without your most important assets.
What would happen to your business if one of your key people were to:
- Suffer a trauma;
- Become disabled; or Die?
Ask yourself… if your business lost a key person:
- Would your business be disrupted?
- Would your business have difficulty in servicing loans?
- Would the profitability and goodwill of your business suffer?
- Would your clients take their business elsewhere?
- Would you lose market share?
- Would you have difficulties in finding the time and money to recruit and train a replacement?
If you answered “yes” to any of these questions, then your business may need key person insurance.
Key person insurance can help minimise the impact of losing a key person by providing your business with funds to cover the costs associated with their loss
A key person is anyone who provides economic advantage to the business through their relative skills and knowledge, their image or appeal to consumers, access to capital or credit, or their ability to organise human resources efficiently and effectively.
The loss of such a person from a business could result in a significant impact on revenue or profits or other financial aspects of a business, such as goodwill, capital receipts, expense, PR, access to credit and customers. Key persons could include the founding business proprietor, key sales staff, key technical specialists, silent partners or working directors.
At Austcover we can develop a Key Person Plan designed to provide valuable funds at a critical time, further assisting and assuring you and your business when it is most needed.