Is your business protected?
The cliché says that in business, no one is indispensable; Smith & Williamson asserts that business owners are the exception to the rule. As National Stress Awareness day (4 November) approaches, should owner/managers take a moment to think about protecting their future?
According to the CIPD (Chartered Institute of Personnel and Development), stress is a leading cause of long term absence from work in the UK. As the recession is making business more difficult, accountancy and financial services group Smith & Williamson asks if business owner/managers have considered protecting their businesses and their families from a worst case scenario.
“Running your own business may leave you little time to consider your financial future, but what would you and your family do if a critical illness such as a heart attack or stroke, forced you to be absent from work,” asks Sharon Grubb, Financial Planning Manager at Smith & Williamson.
“Given the problems of the current economy, key man insurance and business protection are even more important than in a more benign environment. Failing to address what would happen, could have significant financial consequences for the business, the remaining shareholders and could ultimately result in the failure of the business. Anyone thinking of protecting the future of their business should consider:
- What do you want to happen to your share of the business in the event of your premature death?
- Does the business have any loans outstanding that would need to be repaid if you die or cannot continue working? How would this be repaid?
- If you or someone you employ is key to your business, for example someone who generates sales or is working on an important project who would be difficult to replace, how will the business cope financially if that person dies or is too ill to work?
Sharon continues: “You need to consider what the cost implications are, whether any formal agreements need to be put in place and what funds are available to meet your requirements. If there is a cash shortfall, protection policies may be needed. This might, for example, involve policies which provide a lump sum on death or diagnosis of a critical illness payable to the business or business partners."
Legal and General recently published research revealing that 50% of businesses are not protected if one of the key people in the business suffers from a critical illness or dies. Almost half of the respondents in their survey say that their business would fold within 12 months of this occurring. This means that while corporate debt has reached £269bn (The Motley Fool 01/09/09), UK businesses are not protecting themselves and potentially putting the owners and their families at risk.
For more information contact:
Sharon Grubb, Financial Planning Manager at Smith & Williamson
01722 434887
Email Sharon Grubb
PR enquiries to:
Jess Koslow/ Kate Harrison 020 7131 4264/ 4228
Disclaimer
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
Note to editors
Smith & Williamson is an independent professional and financial services group employing over 1,500 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-to-large corporates. The group operates from offices in London, Belfast, Birmingham, Bristol, Dublin, Glasgow, Guildford, Maidstone, Salisbury, Southampton and Worcester.
Smith & Williamson Financial Services Limited
Authorised and regulated by the Financial Services Authority
