Benjamin Franklin was a very impressive entrepreneur in his day with good advice for business owners in this COVID-19 era. He said, “If you fail to plan, you are planning to fail.”
While we all have been experiencing the stress of uncertainty of the future, some business owners have fallen ill and died, leaving their businesses in disarray and their loved ones to contend with mourning their loss and grief and distress of winding up or selling their businesses. The impact of the loss is also experienced by business partners, employees, customers all thrown into uncertainty. Bank accounts are locked out creating crisis with company cashflow and obligations. It is true that if you fail to plan, you are planning to fail loved ones, business partners and employees.
Of course, contemplating death is not an easy thing. Many business owners buy insurance to protect loved ones, but fail to plan insurance to protect the business, which often is the most important asset to their heirs. Heirs appreciate the monetary value of the business but not the prospect of running one, especially if they are not involved with day to day operations. Stalled operations can negatively impact the value of the business.
An easy way for the business owner to avoid this crisis when buying life insurance is to work with the financial advisor to purchase an insurance policy to back a “buy-sell agreement “ that provides an inheritance for loved ones and also allows partners to buy out the deceased’s shares and continue to run the company unimpeded. This fairly straight forward process is planning to succeed for family and business!