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How secure is your business?

Protecting your business asset

As a business owner, you are constantly striving to increase business profitability and to build the value of your business. Your longer-term intention may be to sell your successful business and take the “windfall” or to retain it as a successful family “dynasty” or legacy business.

A natural extension of sustainably building the value of your business is the need to protect the value of your business. Numerous risks lurk in the background that can seriously damage the value of your business unless you take steps via good business insurance to manage these.

Safeguarding the value of your business

When a business loses the services of its sole trader, a key employee, an owner or business partner, the consequences for that business can be serious. Profits can fall, loans may have to be repaid at short notice or, at worst, the future survival of the business can come under threat. It is essential for every business to have a tailored Business Protection Plan with suitable covers that provide financial support in a variety of situations.

What are the financial exposures faced by businesses?

Obviously, maintaining cash flow is king! In endeavouring to do so, a business faces several major financial risks at any stage of its development, unless these have been dealt with at the outset. When considering business insurance, you should look at, for example:

  • Having a succession plan/ownership buyout plan in the event of a buy/sell agreement trigger being activated by events (e.g. death, retirement);
  • Having a debt protection plane. a lump-sum re-payment of business debt in the event of death terminal illness or total long-term disability of any person whose death or incapacitation would trigger a requirement for the debt to be repaid;
  • Cover for the permanent loss of a key person: a capital injection into the business in the event of the permanent loss of a person who is key to the business;
  • Loss-of-revenue cover, to provide a monthly injection of revenue while a key person is unable to work;
  • Having appropriate asset insurance (Material Damage) and loss of profits insurance (Business Interruption) to protect your business against accidental damage or loss eg (fire damage of premises). This is especially important where a business’ cash flow is vulnerable to machinery breakdown.

Where these issues have been addressed with your insurance adviser, via a no-obligation “warrant of fitness” business insurance review, your business will be prepared for any curveballs that life may throw at you. It’s what we do.