The damaging legacy business owners shouldn’t overlook
If you run your own business you’ll know the demands and rewards of doing so.
Something that’s often overlooked by business owners, and maybe particularly relevant to ‘olderpreneurs’, is the financial implications their death or illness could have for their families and/or businesses.
Maybe you’re one of the one in five 50-plus-year-olds responsible for setting up a business today. If so, you’ll be pleased to know the odds of your firm lasting five or more years are over 70% (compared to 28% for those younger than 50).*
A common response of many sole traders is ‘if I die, the business dies with me’. But have you thought about the potentially costly responsibilities and legal commitments your family would be left with should the worst happen? These commitments may include:
- Finance – do you have any outstanding loans/overdrafts?
- Clients/ongoing contracts - do they still need to be fulfilled?
- Leased premises – could a penalty be incurred if they are no longer needed should the business be wound down?
- Staff – would they be eligible for redundancy pay should the business no longer be operating?
Loans are a regular undertaking for those starting up or expanding their businesses. But repayment of a loan when the owner is no longer able to work – at the same time as dealing with the loss of manpower, income and business contacts – can be crippling for a business.
Having the right protection in place can ensure that the funds are available to smooth over any adverse financial impact of you no longer being able to work. Whether that’s helping your family to pay what’s owed and to wind the business down, or enabling your co-owners/colleagues to continue business as usual at a difficult time.
Business protection can be complex so it’s essential to get advice from a financial adviser. They can review your business’s financial affairs and any existing life/critical illness cover and suggest a suitable course of action.
Importantly, depending on how your business is structured the right protection may need to be structured differently to your own personal life insurance. A financial adviser will help you establish the right level of cover to meet family commitments (eg paying off the mortgage, or covering the cost of children’s education) as well as business commitments.
Much like a solicitor or an accountant, a financial adviser is a key professional to have on-board to help protect and grow your business.
If you’re ready to find a financial adviser, you can locate one by using our ‘find an adviser’ tool.
Alternatively, visit our Advice Matters section to learn how financial advice can help you reach your goals.
*Reported by The Guardian, 05/01/14