Feature Story — 5 Tips To Make Sure Your Business is Secure
According to a recent survey by LIMRA("Small-Business Owners", LIMRA International, 2005), an insurance industry research organization, only 1 in 4 small-business owners has a sufficient succession and business continuation plan in place. By not having a plan, small business owners are putting the financial futures of their business partners, their employees and their own families at risk.
Small business owners need to ensure that adequate insurance coverage is in place so that no matter what the future holds, their business can continue to provide for those who depend on it.
Below are five tips for putting a proper plan in place that will protect you, your business and your family.
1. Secure life and disability insurance adequate enough to protect all your assets.
2. Protect your business overhead expenses.
3. Have a plan that anticipates the consequences to the business in the event of your death.
4. Insure your key people.
5. Providing appropriate benefits is key to a successful employment relationship.
According to a recent survey by LIMRA("Small-Business Owners", LIMRA International, 2005), an insurance industry research organization, only 1 in 4 small-business owners has a sufficient succession and business continuation plan in place. By not having a plan, small business owners are putting the financial futures of their business partners, their employees and their own families at risk.
Small business owners need to ensure that adequate insurance coverage is in place so that no matter what the future holds, their business can continue to provide for those who depend on it.
Below are five tips for putting a proper plan in place that will protect you, your business and your family.
1. Secure life and disability insurance adequate enough to protect all your assets.
Small business owners often take out loans or arrange financing with vendors and suppliers. It’s important to have enough life insurance to protect your family so funds to pay off all business debts will be available and well as replace the income you provide in the event of your death. The same is true for disability insurance. It can provide income to you and your family if you were unable to work for an extended period of time.
2. Protect your business overhead expenses.
Your whole business could collapse if you got sick or hurt and couldn’t work for a drawn-out period of time. Business overhead expense insurance provides funds to cover your business’s
operating costs during your period of disability.
3. Have a plan that anticipates the consequences to the business in the event of your death.
A formal, written, and appropriately funded, buy-sell agreement among the business owners or partners is an absolute necessity if an orderly and successful transition of ownership of a business is to occur following the death of an owner. A properly designed buy-sell agreement will satisfy the legitimate concerns of all parties — buyers, sellers, employees and suppliers — so that the continuation of the business can be assured. Life insurance on each owner provides the funds to the surviving owners in order to purchase the business interest from the deceased heirs.
4. Insure your key people.
If you have certain employees whose contributions are vital to the success of your business, you’d be wise to consider purchasing key person life and disability insurance on them. Should such an employee die or become disabled, the insurance benefit would help make up for lost sales or profits and help cover the cost of finding a replacement.
5. Providing appropriate benefits is key to a successful employment relationship.
There is a vast array of benefits you can offer to attract and retain employees. Health insurance, life insurance and a retirement plan are the most sought after by employees. There are also many variations of voluntary benefit options that employees can purchase themselves. It’s important to work with an insurance professional who is knowledgeable in the area of small business employee benefit needs.