No one likes to think about what will happen when they are no longer around or able to make important decisions, but if you are a small business owner, then nothing could be more important for the future of your company. Succession planning is the practice of drawing up a plan for what will happen to your business if you pass away, retire, or become incapacitated. You could leave your business interests to a family member or trusted employee.
Without a clear succession plan, the fate of your company could be left up to the legal system, with ownership contested in a contentious legal battle, and everything you’ve worked to build could be lost. The time to start planning is now: when you can consider your options and make a well-informed decision for the benefit of your business.
Know Your Options
As the owner of your business, you are what is termed a “key person” within the business – someone whose sudden absence could be catastrophic or fatal to the company. Particularly in a small business, one or two people may be responsible for the majority of the operations, with no one else as knowledgeable or qualified to perform the same actions. For this reason, many small businesses are unable to survive the death of their founder(s) or owner(s), and collapse within one generation. If your hope is to create an enterprise that will outlive you, it is time to make succession planning a priority.
One way that more and more businesses are starting to plan ahead is by investing in key person insurance, a type of life insurance where the business itself is the beneficiary in the event of the key person’s death or incapacitation. In the wake of a tragedy, such employee insurance can mean the difference between bankruptcy and the continued survival of the company, by providing the finances to tide the business over during the period of transition. Even if the company is unable to survive in the long run, key person insurance can provide the wherewithal to pay off debts and set the business’s affairs in order before closing down.
Key Person Insurance: Is It Right for Your Business?
If you are unsure whether key person insurance should play a role in your succession planning, ask yourself this question: Who in my business is irreplaceable? If there is any individual without whom you can’t imagine the business surviving, then it may be a good idea to consider purchasing key person insurance for that person.
Only you know what is in the best interest of your company, and only a qualified insurance agent can help you choose the route that best protects those interests. At Turntine Insurance Agency Inc., we are dedicated to looking to the future to protect what you’ve built. As a key player in your business, you take responsibility for its day-to-day operations. Take this step to take responsibility for its future. With agents all over the Suffolk, Virginia area, we are ready to sit down with you and explore your options, so call us and speak to one of our agents about scheduling a consultation today.