How do you measure success in a business?

Success in a business can be measured in a myriad of ways and is often heavily dependent on who runs the business, but It is likely that success will present itself in one or more of the following ways:

  • Creating something that isn’t currently offered on the market
  • Increasing profitability
  • Customer satisfaction
  • Growing the size and reach of the business
  • Providing employment to more staff
  • A director or partner
  • A top sales person
  • A highly regarded employee with significant contacts
  • The creative mind behind the business

If you’re running a business it’s important to ask yourself what would happen if somebody playing a key role were to die or become seriously ill? Would your once loyal clients look elsewhere? Would confidence in your business be impacted? Would your sales and business revenues be affected?

Any of these scenarios could result in a fall in sales or loss of profits and the remaining staff in your firm may be required to take on more work in order to compensate for the loss of a key person.

Protecting your business against such an event therefore makes sound financial sense, in order to limit the impact to the business and its profits. According to statistics from Legal & General, in their rough guide to business protection:

  • 40% of businesses would cease trading within 12 months if a business lost a key person
  • 63% of sole traders would cease to trade immediately and
  • 46% of new businesses would also cease to trade immediately

Taking out Key Person Protection is a simple solution. Simply an insurance policy which is designed to pay out a lump sum in the event that the key person insured dies during the term of the policy. This lump sum payment (called the sum assured) can be used to compensate the business and insure against the event of the impact on sales and/or profit. It could also be used to cover any of the costs incurred as a result of needing to replace the person concerned. All plans should be tailored to the needs of each business in order to create a bespoke solution.

If you are concerned about the impact a Key Person’s death may have on your business please contact me on 01900 310440 or email me stuart.smith@armstrongwatson.co.uk

 

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