One of the topics I like to bring up to business owners is business succession. You’ve worked long and hard building your brand (sometimes decades), gaining customers and expanding your business. You think in terms of five or ten-year plans, on where you’d like your business to be while navigating the financial and economic headwinds. Your business has become a source of pride and rightfully so. Further, it’s your financial sustenance, allowing you to live a lifestyle which offers freedom and the ability to plan for your financial future. But it’s more than that; chances are you’re not alone in this world, meaning your business sustains not only you, but your family as well. Your spouse and children (as well as your employees) have grown accustomed to the lifestyle you and your business have provided. Little, if any thought might be given on a daily basis as to what would happen if that source of income were to suddenly stop.
Invariably, when I ask a business owner what would happen to their business if they were to die today, eyes roll and I get the response of “I’m not going anywhere. I’m in pretty good health and even if something DID happen, I’m sure my employees could handle the transition”. That’s all well and good, I tell them, but there are a few problems with that logic. First, we don’t know WHEN we’re going to die and we certainly don’t know how. Be it a traffic accident, sudden physical crisis or even a prolonged illness, most of us feel immortal on a day-to-day basis, with the unknown just around the corner. Most of us do know someone who passed unexpectedly and it was a shock to us. I’m sure THEY weren’t expecting to go when they did and neither did their family or friends.
Secondly, such an event is devastating to not only the family, but to the employees as well. With most companies, the owner is the leader and decision maker and, without him/her, critical decisions might be delayed or avoided altogether, usually because no succession plan has been put in place naming a replacement. Further, it isn’t unusual for employees to look to the grieving spouse for direction, whether he or she is equipped for it or not. And if that spouse can’t give assurance that the business will carry on, then there’s a good chance the employees will start looking at other employment options. So, what’s the solution?
A written business succession plan is a mandatory step in ensuring a smooth transition in an otherwise emotional situation. Part of that plan is Key Person insurance, where the Key Person, (usually the owner, but really anyone who is considered the “decision maker”) is insured so that if he/she passes unexpectedly (or due to a prolonged illness), the death benefit will be available for two reasons: as an additional cash cushion to weather what could be a lull in orders while customers analyze the future viability of the company and also to be utilized as either a bonus for an in-house individual promoted to take over the Key Person position or as an incentive for a new hire replacement. Additionally, by utilizing Key Person insurance, employees will feel confident in the ability of the company to continue as a going concern.
I realize this is a topic most business owners don’t want to think about, as it’s emotional and forces us to address our own mortality. However, planning now for what might become a reality will avoid stress not only for your family and employees (who really ARE family), but for your customers as well.
If you’d like to talk about how Key Person insurance can give you, your family and your employees peace of mind, please contact me at d.babecki@db3insuranceservices.com or give me a call at 941-704-3134. As always, thank you for reading and let me know if I can be of
service.
About David J Babecki
David Babecki is the Owner/Founder of DB3 Insurance Services and has over 20 years of experience in personal insurance, proudly protecting clients against outliving their money, stock market risk, and of course, insuring their lives against the unforeseen.
David started his career with Raymond James & Associates in 2000 before becoming an independent agent where he offers a number of services to solve client needs. David has spent the majority of his life in the beautiful Tampa Bay area where he currently resides with his family.
David is a Licensed Life Insurance Agent FL # D053146
The above article reflects the opinions and thoughts of David J. Babecki. The information contained in this material is believed to be reliable, but not guaranteed. It is for informational purposes only and is not a solicitation to buy or sell any products which may be mentioned. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.
Please note: all guarantees and/or promises are based on the claims-paying ability of the respective insurance company.
