Business Services

Business Risk Management

businessriskmanagment.jpgMore often than not our business is our most valuable asset; it generates the revenue to achieve our goals and to acquire the assets we have today and those we want in the future.  While it is impossible to be in business and avoid risk, it is certainly possible to mitigate the risks.  Business insurance does basically one thing; it provides money for the business just when it is needed, should an insured event occur.

Business insurance is one vital part of a business risk management plan and it isn’t the only thing that needs to be considered.  Business insurance provides the funding, but it is also necessary to look at all the steps that can be taken to reduce the risk of being in business.

Contact us now to find out more.  The first consultation is at our expense, so you have nothing to lose.  We are certain you will benefit and learn more from the first meeting.

Business risks

Take a look at some of the risks we business owners face.  First there are there are losses to physical assets:

  • Fire to premises causing lost of stock, records and profits.  These losses can be managed with a good fire and general insurance policy that also covers loss of profits.

  • Accidental damaged caused to the property of a third party, usually a customer.  This can be covered with Public Liability cover.

  • Errors made by professionals in the normal course of business that causes a financial loss to a customer or client.  Professional Indemnity Insurance can manage this risk.

  • There are other risks that can be protected with a business insurance risk plan, and these include electronic, internet, or website risks, director’s liability, employer’s liability, and more.
Then there are the business risks that can be more difficult to quantify, yet can be equally if not more devastating to a business owner or owners, these are losses caused by the impairment, death or disablement of an owner, shareholder, or other key person within the business.  We frequently find businesses have their physical assets well protected but there is a substantial “people risk”.

At Iconic Financial our experienced business risk management advisers are able to assist you to determine a financial value for the key people in your business.  This is likely to include the business owners and shareholders and can also include key employees.  Think about who in your business may have an impact on your bottom line if they departed your business now, without warning.

I’m a sole-trader business

Here are some questions you should ask yourself if you are a sole-trader business.  If something happened today that prevented me working in my business for the foreseeable future:

  • What would happen to the revenue my business generates? 

  • Would I be able to pay my bills?

  • Would I be able to pay and retain my staff?

  • Would my family and I have enough to live on?  and if so, for how long?

  • Would I be able to pay my mortgage, or would I risk losing my home?

  • Would I get the help and rehabilitation I need to get me back working in my business as soon as possible?

  • If I were long term disabled or died prematurely, what value would be realised from my business in a fire-sale situation?  and how would this impact on the people I leave behind?
No Obligation Consultation at Our Expense
Iconic Financial invites you to have a business risk appraisal at our expense, in other words free to you.  This initial assessment will enable you to determine the path you wish to take with your business risk.  This could be taking all of the risk yourself, or could involve assigning to of the risk to an insurer.  It will also help you identify strategies you can put in place to reduce business risk; and these often cost you nothing.  To find out more contact us now.

We’re a business with multiple shareholders

Here are some questions to ask if you are in a business with more than two shareholders, if something happened that prevented you from working in the business for the foreseeable future.

  • What would happen to the business revenue if one of the shareholders or key people in the business were no longer able to work?  Would the revenue be affected and by how much?

  • How easy is it to replace the affected person with someone of equal knowledge, skill and drive?  How quickly could this be achieved?  What will it cost to find someone?  Will more than one person be required to replace the skills of the disabled shareholder/key person?
  • In such a situation what extra burdens will it place on other business owners and staff?
  • Will the loss of revenue affect more than profitability; will the company still be able to meet its financial obligations?  Will you be able to pay your suppliers and creditors?  Will you be able to make your tax payments?
  • If an owner or shareholder is unable to return to work, how long will the business continue to pay a salary and profits to this person who is no longer contributing to the success and revenue of the business?
  • Would you take on their spouse or partner (or one of their relatives) as your new shareholder; despite the fact they do not have the skills of your former shareholder?  How will you feel in time about paying them an equal share, even though they are not contributing?  Will they have they same ambitions for the business as you?  Will they be keen to invest profits back into the business for future growth? Would you prefer to buy the business back from the estate of a former owner/shareholder?  If so where will the money come from to fund the share purchase?  Will they agree with your valuation of the business (which may now be less in the absence of a key person)?  What if they refuse to sell?  
  • Will your bank continue to provide finance when they learn your business has lost a key person?  Will they require a reduction in the debt exposure, as is so often the case?  How will you reduce your debt to the bank at this difficult time?
  • Does the business have any business loans?  They are frequently called in when a business may be impaired by the loss of a key person.
  • Have the remaining owners/shareholders signed personal guarantees, such as when signing a lease agreement, or securing bank lending like an overdraft facility?  Are you aware such guarantees do not die when a person dies and could have an impact on your estate? Personal guarantees can be called in on events such as this; and creditors will often go for the easiest source of money, such as the estate of a diseased person who has received a life insurance payment; or the person with the most assets: or this may be the shareholder who is still working.

All of these risks can be effectively managed with a business risk management plan that is tailored for your particular business.  Do you have key people in your business that hold special knowledge, e.g. engineering skills, marketing skills, or primarily hold the client relationship?
No Obligation Consultation at Our Expense
Iconic Financial invites you to have a business risk appraisal at our expense, in other words free to you.  This initial assessment will enable you to determine the path you wish to take with your business risk.  This could be taking all of the risk yourself, or could involve assigning to of the risk to an insurer.  It will also help you identify strategies you can put in place to reduce business risk; and these often cost you nothing.  To find out more contact us now.

A Business Risk Management Plan at no cost to you

It is likely that your business risk plan will include insurance.  If Iconic Financial puts this insurance cover in place for you, with the most suitable insurer for your needs, it is likely that you will not need to pay us directly for you personalised business risk management plan.  Either way, you will not be charged anything without a full understanding of the costs and giving your written agreement.  So you have nothing to lose to find out how your business can be best protected.

What is my Business Risk Management Plan likely to do?

investmentrisk.jpgYour business risk management plan can do any, or all of the following:

In addition to providing you with strategies for reducing your business risks, your plan can, in the event of a key person, owner or working shareholder dying or becoming disabled:

  • Provide money to meet your on-going business expenses.

  • Fund a replacement person to fulfil the role of the person no longer able to work in the business.

  • Provide the business with a lump sum of money to replace lost profits and fund cash flow.

  • Provide the business with the funds to repay debts.

  • Provide the business with the money to remove personal guarantees.

  • Pay the wages or salary of the disabled person for the rest of their working life; therefore taking this burden off the company.

  • Provide the money to enable the surviving shareholders to purchase the shares from the estate of the deceased shareholder; thus providing certainty of the businesses future.

  • Providing the funds for an orderly wind up of the company if that is the desired outcome.

  • Ensuring certainty over the future ownership of the company through the use of a compulsory Buy/Sell Agreement.  This requires the estate of the diseased shareholder to sell the shares in the company to the surviving shareholder(s) at a pre-agreed price, or at a pre-agreed valuation method.  This means to do not find you have unexpected and unwanted shareholders in your business.

What types of businesses will benefit from having a Business Risk Management Plan?

All businesses will benefit whether you are a small, medium or medium-to large-sized; whether you are a sole-trader business, or multi-shareholder business, you will benefit from having a tailored, well-constructed business risk management plan.  

So why not find out now how your business could benefit? The first consultation is at our expense, and if we place insurance business on your behalf that may fully fund the cost of your plan.  You will learn from the consultation, and it may cost you nothing; there will be no unpleasant surprises, so contact us now to make an appointment.

I’m new to business

If you have been in business for less than four years, the business risk you face is often greater than for an established business, yet your options for managing this risk are more limited.  However there are steps you can take to protect your business, yourself and your family from the risks of being in business.  Talk to us today about your special needs and build a secure future.