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Protecting your business ownership

Any business owner will understand the importance of planning for the unknown. There are many areas that can go wrong and affect the business negatively, such as natural disasters, human error or technological failure. 

A CERTIFIED FINANCIAL PLANNER® will analyse the needs of the key business people in order to implement plans and suggest financial products that will protect the business ownership.

1. Recovery plan

A business can prepare for future risks by creating a recovery plan. Natural disasters can cause devastation to property, while technological failures can mean a huge setback for your business.

Financial planners can conduct a business impact analysis in order to identify potential hazards and assess any future risks. The recovery plan will include communication in a crisis and incident management steps. The financial advisor will consider potential risks to your business and the most effective courses of action to ensure your business is protected.

2. Business insurance

Insurance is essential when it comes to protecting the ownership of your business. The financial planner can suggest suitable cover for your business, such as property insurance and liability cover. Property insurance covers items like office equipment, laptops, mobile devices and furniture. While liability cover will protect the business against legal claims and workplace allegations.

3. Personal insurance protection

Another form of business insurance that should be considered is personal insurances such as life insurance, total and permanent disability, trauma and income protection. Income protection in particular covers your most important asset: yourself. What this means is if you’re unable to work due to disability or illness, income protection will usually provide around 75 per cent of your regular income.

Personal insurance policies can help protect the business should you or other key people in the business be unable to work for either a temporary period of time or permanently.

Business succession planning and buy/sell agreements are often funded by Perosnal insurance policies because they will are used to compensate your beneficiaries by transferring your part of the business to the remaining owners in the case of death or serious illness.

4. Family trusts

Many business owners want to protect their business assets. In some cases a family trust is set up, where the family member(s) is made a beneficiary but is not involved in the running of the business. The individual or business acts as the trustee carrying out the everyday business finances. The advantage of setting up a trust is the family member has reduced liability. A financial planner can help with the implementation of the family trust and ensure the protection of your business assets.

5. Retirement plans

Many owners view their business as their nest egg and when the time comes will sell it off to be used as their income in retirement. Financial planners can help set up a succession plan for those looking to pass on some or all of the business management. The plan is put in place to reduce the impact the changeover will have on the business and the owner’s finances.

Succession plans often fail when there is insufficient time for the implementation of the plan. It’s important to provide at least five years for the plan to be successful and roll over smoothly.

In some cases the business may not sell for the amount envisioned by the owner, as many businesses cannot be sold for a profit. In this situation it’s important to set up alternative retirement plans, such as smart investments or lump sum super contributions.

Often the protection of your business ownership can be complex, as many areas need to be covered. A CERTIFIED FINANCIAL PLANNER® is experienced in dealing with the varying financial products that are needed for businesses and business succession planning. So whether you’re selecting business insurance or looking to retire you’ll be protected against the varying factors the world can throw at you and your business.

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Dante De Gori

Dante De Gori

Dante is General Manager Policy and Conduct at Financial Planning Association of Australia Ltd (FPA).

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