(Guest post by Tatiana Coulter, Monarch Advisory)
I’m about to have a chat to a potential client about his business insurance needs. We’re talking about what would happen to his business interests if he died or became totally and permanently disabled, and could no longer work in the business.
My initial instinct was to have quite a technical conversation but my concern was that I would bombard him with industry jargon as opposed to taking a more personalised approach. So I’ve decided to change tack and opted to have a conversation about his business and why he may need to consider protecting his interests in the business. This also ties in with his personal estate planning needs. The angle I’m going to take is to look at things from his perspective – why did he start the business and what is he trying to achieve from it?
This made me start to think why I started my business and I realised that, at the end of the day, when you start your own business, not only are you looking to make a better life for you and your family, you also want to take control of that life.
It is alarming to learn that 80 percent of businesses don’t have an appropriate succession plan (KPMG Survey 2009).
In order to maintain control of your business in any event, it is imperative that business owners ensure they have a succession plan. This plan covers events ranging from retirement and sale to death and disablement. Whilst most people think it is a complex and onerous thing to do, business succession can be as simple as sitting down with a pen, piece of paper and a glass of wine and writing down what you want to happen.
The client doesn’t need to get bogged down in definitions and structure of buy-sell, key person cover etc. – this is what they outsource to me as their financial planner. The client just needs the peace of mind that what they want to happen will take place. This is where financial advice is critical, and where you really need to talk to a financial planner. I often say to my clients, “you can hope for the best as I will help you plan for the worst”.
As a business owner, you work hard to establish your business, you can see the fruits of your labour, and your lifestyle is definitely on the way up. What would be a shame is to let someone else decide where YOUR hard work ends up.
I hope this helps you understand the importance about succession planning in a business – it is just as important as getting a Will for your personal needs. If you would like any further information, please feel free to contact me.
IMPORTANT INFORMATION
This information was prepared by Monarch Advisory Group Pty Ltd, ABN 75155549705. Licensed under Securitor Financial Group Ltd, ABN 48 009 189 495 AFSL & Australian Credit Licence (ACL) 240687 (Securitor) and is current as at January 2013.
This publication provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The information in this publication does not take into account your objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it and obtain financial advice. Any taxation position described in this publication is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and our interpretation.
Your individual situation may differ and you should seek independent professional tax advice. The rules associated with the super and tax regimes are complex and subject to change and the opportunities and effects will differ depending on your personal circumstances.
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