Small to medium businesses have a common problem – They tend to be reliant on 1 or 2 key individuals within the organisation. Most accountants agree that the majority of businesses fail when the key income generator stops producing the life blood – cash flow and profits!
- Banks and creditors become hostile.
- Borrowings increase to cover the loss.
- Confidence drops and future contracts become uncertain.
Without a funding mechanism in place the end is often near and years of sweat and toil come to nothing, ancillary services (such as their accounting professionals and suppliers) also suffer as another client disappears.
In an ever increasingly competitive market, funding the inability of the 'keyperson' to not only maintain profits within the company but also maintain business momentum for future growth. Insuring the keyperson against the inability to work in the business will:
- Inject needed capital.
- Maintain credibility for creditors and lenders.
- Make future contracts and earning more certain.
- Fund the replacement of stand-in expertise.
The Process
- Complete an in-depth 'needs analysis' of the risk to the business.
- Consult with other professionals on appropriate structures and planning.
- Commence a training program to ensure that skills are widely available within the organisation.
- Restructure the organisation and personal situation to protect assets and minimise loss should such an event happen.
- Implement a temporary funding plan until self-reliance is achieved. Utilising complimentary and appropriate contracts.
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