As a business owner, I understand the challenges of running and operating a business. If the biggest assets entrepreneurs have is themselves, why aren’t we doing more to protect ourselves as assets? Many times we get too involved in growing our businesses, but tend to overlook how to protect them, and ourselves, against some of life’s uncertainties.
Before you decide you’ve done enough to cover your bases, here are 5 areas that are often overlooked when assessing risk:
- Access to capital to help grow the business – Sometimes a business can’t fully reach its potential if it doesn’t have access to capital when needed.We know the banks are there to help, but sometimes businesses just don’t fit in the banks lending box.There are other options out there, specifically raising capital from investors, Lease Buy-Back options, other forms of secured lending, etc.The solution should be evaluated on a case-by-case basis, but there are options for businesses looking for capital.It’s a good idea to educate yourself on these options before you NEED the money in order to make the most sound, educated decision on the which solution to choose, rather than making that decision based on emotions.
- What happens to the company if you get hit buy a bus – Not a pleasant thought, I know. But is your company, and your family, protected if something does happen to you?What type of transition plan is in place?Is there adequate insurance in place to cover costs of debt or lost income for your family?There is a wide array of options to choose from in regards to protection against unforeseeable circumstances, some even potentially have some tax-saving advantages while the business owner is alive.
- Would your company thrive in the event of serious illness? – A Health Savings Plan is an option for business owners where, in the event they become seriously ill, would receive a tax free lump sum of revenue for their business.This sum can help with things like payroll, operating expenses, and ultimately allow the business owner to take money and get treatment so they can get better and get back in the business to help it grow and succeed.Its important to know there is a cost to this plan; however, if there is no illness that occurs, there is an option to get your premiums back!
- Job A or Job B?- If you weren’t able to perform the duties of your job because you had a disability, is someone still going to pay you?Income replacement is an option for business owners and employees where, if they can’t do their job duties, they would still receive an income.To give an example, let’s say you had a choice between Job A or Job
Job A
$100,000 per year in Income
$0 if you can't work
Job B
$95,656 per year in Income
$60,840 per year if you can't work
How long could you support your lifestyle if you didn't have an income. This illustrates the concept of how income replacement plan would work.
- Are your employees protected if something happened to you or your business? – A lot of business owners recognize the importance of their employees.They are the front line of many organizations, and a strong workforce is often key to their success.There is a way to protect their wages, along with other expenses that would incur, due to a lack of revenue stemming from an unforeseeable life-event.Other expenses might include things like rent or lease payments, fixed or variable costs.This type of protection is called Overhead Insurance, and premiums paid can also be tax deductible.
We all work hard for our money and for our businesses. I can attest to the sleepless nights wondering about the “what-ifs” and the myriad of circumstances that may or may not present themselves down the road. When it comes to protecting your business, you can make it a little more bulletproof by ensuring that you’ve considered all of your options. This includes ensuring you have alternative lending options in case you can’t secure funding from the banks; that you’ve considered insurance options in case an unforeseen circumstance or illness should render you unable to continue to work; that you can maintain your lifestyle should you no longer be able to continue to receive a regular income; and that your employees are taken care of should your business no longer be able to have work for them.
When you’ve made sure you’ve considered a hit coming from every angle, then you can confidently focus on growing your business knowing you, your business, and your employees are well taken care-of.
If you are interested in going through your business protection checklist, or to review any current coverage you may already have in place, you can reach Chris Boyle at 780 966 5084, or by email at chris@oaktreews.ca
For additional information about these and other services, please visit Chris’ website at www.christopherboyle.net