Small Business Saturday Blog

Surviving and thriving as a small business

Friday, February 26 at 10:34

We hear from The Protection People about insurance protection for a small business:

Every day, we speak to business owners across the country that are looking to safeguard their commercial future through the use of protection insurance products.
Yet we only manage to speak to a fraction of those who really need protection – with recent statistics from Legal & General stating that only 5% of business owners have put insurance in place to protect their “key people”.

Ask yourself the question:  “If I lost one of the key people from within my business, be they a director, salesperson, engineer or manager, would my business be able to survive and thrive in the immediate aftermath of that loss?” For most SME’s, unaware of the protection solutions available to them, the answer to that question would be a resounding “No”.

The reality is, with around 79% of SME’s having 3 directors or less, it goes without saying that these businesses would be put under significant pressure if the worst happened and they lost one of their key people. When you lose a key person from a business, unfortunately there is more than just the emotional upheaval to worry about.  You will need to advertise for, recruit, induct, train and mentor a replacement and this is before you consider any potential loss of profit brought on by the unforeseen absence of the aforementioned key person.

Recent research found that approximately 40% of SME’s across the UK would cease trading within 12 months of the death of a key person.  This statistic alone should make business owners across the country sit up and take notice of the need for robust continuation planning.

With the financial crisis still a not too distant memory, and the economy seemingly stuttering along from quarter to quarter, now is a more pertinent time than ever to ensure your business is protected from risks which are relatively easy and affordable to mitigate against.

One of the businesses we spoke to this week had decided to insure their top account manager against both death and critical illness.  They had done this as this one individual contributed in the region of 28% of their gross profit month on month.  They told us that without this account manager, they would suffer financially as their profit margin was tight and they would have to use an executive recruitment firm to source a replacement which can be extremely costly.

A simple Key Person policy can insure against such risks.  You can insure your business against a sudden loss of profits and the cost of replacing a member of the team.  Putting a continuation plan in place will give you and your business the financial space to breathe should the worst happen, so you can make sensible measured decisions, not rushed ones.

At The Protection People we specialise in formulating continuity plans for business of all shapes and sizes, regardless of the type of industry.  Quite simply, our job is to find the right solution for your business so you have peace of mind at a price you can afford.  For free impartial advice tailored to your business, speak to one of our qualified business protection consultants on 0808 281 9393.  We’re here to help.

For more information visit www.theprotectionpeople.co.uk

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