Business Insurance

What every business owner needs to consider today

Despite pressures – perhaps cash flow or staff shortage – keeping insurance up to date is vital to steering the business through tougher times.

Protect your investment
You invest in your business financially and emotionally, and it has taken years for you to build something valuable as the primary source of income and wealth for you and your family.

What if it had to be sold?
At a distressed value?
And you had no choice over the matter?

This is exactly the position you would find yourself in if your business succession planning is not in order.

What is Business Succession Planning?

Most pro-active business owners begin planning transition of ownership well before their retirement. Managed poorly, business succession is a significant risk to your wealth and the well being of your staff, clients, and providers.

Successful business risk management takes into consideration:
(a) The chances of an event occurring, and
(b) The potential impact of the event.

So how would you manage transition in your business – in the event of your death, illness or disability?

Speak to your Count Adviser as soon as possible about reviewing or setting up your business succession plan, from all angles.

What are the chances?
The facts and figures behind our health.

An estimated 77% of Australians suffer a long term health condition that lasts 6 months or more1.

For those under age 65, the prevalence of disability was 1 in 6.7 people. In at least 38% of these cases the condition was unexpected1.

Questions for Business Owners and Key Decision Makers

There are two key perspectives to consider here:
– The impact on the business
– The impact on the business owner and their family

For your business, ask yourself the following questions:
1. Do you have business loans secured against personal assets?
2. Would the lender consider the health event as a ‘default’ and seek repayment or at least renegotiation of the loan terms?
3. Would your business be in a favourable position to renegotiate such a loan in case of such an event?
4. In the event of death, would the deceased’s spouse become your business partner?
5. Would you have the funds to buy out the partner’s share of the business? Remember the lender is unlikely to extend your loan arrangements under such an event.
6. How would such an event affect your client/ supplier relationships?
7. Would there be a loss of expertise within the organisation? What is the cost to replace this expertise and ensure the future survival of the business?

Let’s not forget the flow-on effect to each business owner’s personal and family circumstances.
For example:
1. How would the loss of business wealth affect your family? Think of your home mortgage; your children’s education.
2. How would the nature of your family relationships change with this serious and new stress?
3. Will you be able to concentrate on recovery and rehabilitation if you were under financial stress?
4. How long would it take for your family to recover?
5. Will your spouse be forced to increase his/her workload – in addition to supporting your recovery?

Given the potential impact on you and your family’s personal wealth and quality of life, managing these risks should be a priority to your business.

How do I manage risk to my business and personal wealth?

Develop a comprehensive business succession plan together with your Count Adviser as soon as possible.

1. Australian Institute of Health & Welfare (2008). Australia’s Health 2008. Canberra.