Running a business is perhaps the most rewarding way to earn a living. Building wealth as your own boss, in a trade that you know and love, can offer you immense satisfaction.

Of course, while there are many upsides to running your company, business owners also face a range of challenges. 

Whether it is rising prices forcing you to make difficult decisions, or internal issues with staffing, you will no doubt have to navigate various demanding scenarios to ensure that your company continues to operate at the high level of service your clients or customers have come to expect.

As a result of these unique challenges, it can be sensible to protect your business against certain events. This way, by preparing for the unexpected, your company will be better placed to continue thriving in the face of adversity.

Read on to discover a few steps you may want to take to protect your business.

Look at protecting against the possibility of a key person dying

When you build a business, it is often the case that certain people become absolutely irreplaceable.

Whether it is you, a business partner, a head of a department, or a manager, there are commonly individuals who have specific skills or knowledge of the company that makes them integral to your operations.

But have you imagined what might happen if one of these individuals in your business were to pass away? Although you might be able to muddle through without them, losing a key person like this could be seriously detrimental to the company.

It could result in a significant skill gap in what needs doing in the short term. Over longer periods, it could translate into loss of quality and income, as you struggle to replace the hole they have left behind.

In this case, having key person insurance could be helpful. This type of cover provides a payment directly to the business in the event that a key person named on the policy dies or is diagnosed with a terminal illness.

Having this money could help you to cover the gap left behind from losing that key person, ensuring the business is able to continue operating.

Consider what would happen to business debt if a key person died 

As well as protecting the wider business should you lose a key person, you may also want to think about what would happen to business debt in a similar situation.

You may well have borrowed money in your business, perhaps taking out a loan when you were first starting, or borrowing more to expand your company further.

But, if one of your key members of staff were to pass away or become terminally ill, your company would still owe this money to whoever you borrowed it from. This might prevent the business from meeting these debt obligations, which could seriously affect the longevity of the company.

As a result, having cover such as business loan protection could be immensely useful. This type of protection can clear the outstanding debts so that, at the very least, you do not need to worry about your borrowing while you deal with losing someone important.

This could ensure the business is able to continue meeting its debt obligations, even in the worst of circumstances.

Ensure the interests of the business are protected if a shareholder passes away

While losing a key person in the business is a common concern, one issue that you may not have considered is one of your shareholders passing away.

Your shareholders have a significant amount of power and influence in your business. So, one of them passing away could be hugely detrimental to your ability to continue operating. 

This is especially the case when you consider that you will have to spend time working out how to proceed if this were to befall you. 

A shareholder may pass their shares to a beneficiary who has no interest in contributing to your business. So, you may well be concerned about how they will handle the stake they have inherited.

To protect against this affecting your business, you could consider having shareholder protection in place.

If one of your shareholders dies or is diagnosed with a terminal illness, this cover could provide you with money to buy back shares from the family members who might have inherited them.

By having this protection, you can be confident that you will be able to retain control of your business should this happen. Furthermore, it can free up valuable time for running your business that you might otherwise have had to spend sorting this issue.

Please bear in mind that you would need to put appropriate legal agreements in place for this, as well as protection.

Get in touch

If you would like help organising your money as a business owner, then please do get in touch with us at DBL Asset Management.

Email or call 01625 529 499 to speak to us today.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse. Cover is subject to terms and conditions and may have exclusions.

The Financial Conduct Authority does not regulate tax planning.