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Business Continuity

Use the findings from the 2023 Planning For the Unexpected Research Study (PDF) to help position your business for long-term success and financial stability.
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Are you protected from the loss of a key employee? Only 26% of business owners have key employee life insurance.
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Are your loved ones protected if you are not around to run your business? Only 43% of business owners have life insurance to protect their families.

How a buy-sell agreement saved a business

What if the unexpected happened and you were no longer around to run your business? Do you have a succession plan in place? Meet the President and CEO of Benefits Concepts, Inc. who shares the story of how the unexpected death of the company’s owner didn't mean the end of the business because he had the foresight to put a buy-sell agreement in place.
 

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The Value of Key Employees

You already know how important your employees are to the success of your business. What you may not have thought about is how much the contributions of certain key employees are worth to your business - whether it's their creative genius, sales acumen, or leadership role. And, as you can see, key employees don't necessarily have to be members of your management team, but could very well be a partner or even yourself.

It's important to understand the value of key employees and the impact that losing one of them could have on your business. Use our calculator to help determine the financial value of your key employees, then learn how you can help protect your bottom line. 

The Real Business Podcast

Tune in for expert insights on safeguarding your business. We'll cover everything you need to know to protect your business from unforeseen risks and challenges.
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Tagged as Business Owner

Case studies

The impact of a disability on a business (PDF)

Here’s a real life story of how an unexpected disability impacted a thriving dental practice.


The importance of not overlooking business planning (PDF)

Even the sharpest business owners can succumb to distraction and delay, which can spell disaster.

 

FAQs

Business owners should ask themselves this question: If you were to leave your current business to start a new business, who would you take with you? Think about the value each employee you have brings — whether it’s their creative genius, sales acumen, or leadership qualities — and what those characteristics are worth to the business. Those that make the most impact to the bottom line are those that you cannot lose.
When an employee leaves, businesses can often spend a large percentage of the employee's annual salary to replace them. But the only cost to the business isn’t monetary.
A business purchases a life insurance policy on its key employee, pays the policy premiums and is the beneficiary of the policy. If that person unexpectedly dies, the company receives the life insurance death benefit. The purpose of key person insurance is to help the company survive the impact of losing the person who helps make the business successful. The business can use the life insurance proceeds for expenses until it can find a replacement employee, cover the costs to find, onboard and train a replacement employee, and pay off debts. In addition, if the employee stays with the business until retirement, the policy can be transferred to the executive or insured employee by the company as an employee benefit.
A buy-sell agreement is a legally binding agreement that requires one party to sell and another party to buy ownership interest in a business. A buy-sell agreement can be designed to protect the business in the event of certain triggering events, such as the death, disability, divorce, or departure of an owner. The buy-sell agreement stipulates how much one party must pay the other’s estate, heirs, or the business itself for their share in the business should the triggering event take place, as well as the method whereby the business value will be determined at the time the event occurs. It may also include other relevant details such as the source of funding for the buyout and who is eligible for payment under the agreement.
There are different ways to structure a buy-sell agreement. The structure you choose should be based on a number of different factors, such as entity type, number of owners, etc. It’s recommended that you consult with your attorney to determine the structure that best suits your situation. However, the two most common structures are an entity or stock redemption plan and a cross purchase plan.
When choosing a successor, your decision should be based on who can do the best job — not on prejudice, biases or a sense of entitlement. There are some basic traits you should look for in the individual you choose to take over your business, which we call the 5 C’s: Character, Confidence, Capability, Competence, and Commitment. Sometimes the right successor isn’t in the business today and owners need to make the hard decision that’s in the best interest of the business to either hire outside management or sell the business to a third party.

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