Businesses usually arrange insurance for damage to tangible things such as premises, stock or equipment, and may even have plans in place for how to continue running after a flood or fire damage. However, the importance of key owners and staff is often overlooked, and can have disastrous consequences for a small business.
For example, if you or one of the other partners suddenly died, or became critically ill and wanted to leave the business due to their condition, would the remaining partners have sufficient funds to buy their share of the business from them or their beneficiaries?
In most cases, when one of the partners in a small business dies, their stake in the business is likely to pass directly to their family. If the deceased held a majority stake in the firm, the remaining partners could lose control of some or all of the business, and may have to work with members of the deceased partner’s family, who may insist on taking an active role in running the business. If their ideas and views are not aligned with the other partners, or they don’t have sufficient expertise, this could lead to conflict, threatening the ongoing success of the firm.
Further problems could arise if any of the deceased’s family wants to sell their inherited share of the business; if the remaining partners can’t raise the funds to buy it, it could be sold to a competitor. Alternatively, if a buyer can’t be found, the family could suffer financial hardship at an already difficult time.
Partnership protection offers peace of mind that, on the death or critical illness of a partner, the future stability of your business would be safeguarded, by providing the surviving partners with the necessary funds to buy the deceased or ill partner’s interest in the business.