Business owners need to be constantly on guard for events that may force a premature exit from their ownership interest in a thriving enterprise. Those events include death, disability, divorce, distress, disagreement and the unexpected departure of key personnel.
Insurance plays a critical role in helping businesses survive many of the events listed above.
Our rapidly changing society has introduced new kinds of disruptors not contemplated 15 years ago.
An insurable catastrophic event can close a business for good if the coverage in place is not adequate.
Statistically, only 60% of businesses survive the second year after a fire.
A data breach can also be devastating to a small business.
Cyber Liability coverage is very affordable and absolutely a necessity in this high-tech world.
Actions you need to take now
1. Analyze your businesses’ flow chart.
Identify critical aspects of the chain to make sure nothing can shut you down indefinitely. Concentration of knowledge in your workforce, limited suppliers, and unique equipment all need to be duplicated and insured properly.
2. Ensure appropriate legal documents are in place.
You’ll want to have the appropriate legal documents that can be designed to mitigate divorce and disagreement issues.
Are your buy-sell and shareholder agreements appropriate and current? Are wills and beneficiaries current on life insurance policies? Are all your advisors working together to protect your interests and estates? Do you have strong employment agreements in place to protect your intellectual property?
These are all questions you should visit yearly, if not more often.
3. Have a back-up to critical staff positions.
A strong economy can be a nightmare for small businesses. The country is facing a severe skilled labor shortage, and in the next 10 years, a high percentage of workers over 60 years old will leave the workforce. De-risk your business by having a back-up to critical staff positions.
Create job descriptions for those individuals and begin training other staff as a back-up. Identify job responsibilities that you can outsource and identify those critical responsibilities in the event a key employee becomes disabled, retires, resigns or passes away.
4. Prepare your business for a possible sale.
Although only 30% of small businesses get sold, business owners always need to be preparing their business for a possible sale.
Preparation requires running your business as if it is always for sale and committing the resources and talent to increase value.
You should also do a business valuation every two to three years and focus on 90-day priorities. The key is to be prepared for what lies ahead for your business. There is no better time to start than now!
If you have questions or want to learn more about protecting your Lehigh Valley business, speak with our Lehigh Valley insurance experts. We can design a business insurance policy customized to your specific business needs. Arbor Insurance Group provides Commercial Property Insurance, Commercial General Liability Insurance and other business insurance products throughout the Lehigh Valley, including Allentown, Bethlehem, Easton, Emmaus, Macungie and surrounding areas.
