You cannot encounter new
possibilities and opportunities
without taking risk.

Being aware of the financial risks in business and
managing risk is an important part of business planning.
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Business Risk Insurance

Business risk covers a number of factors, from the risk of a key person being unable to work, the risk of being sued or even the risk of not having adequate business risk insurance. Leenane Templeton accountants and advisors can help you to navigate through minimising risks within your business, for example through business structuring or key person insurance.

Owners of very small businesses, also known as micro businesses, frequently fail to allow for the business risks they face. The main reason for most business owners is that they are just too busy working in the business rather than focusing on what “might” happen.

But that really isn’t a good enough excuse. Owners of even the smallest businesses need to carry out a comprehensive business risk assessment. This should include documenting as many conceivable events as possible, including but certainly not limited to:

suppliers going out of business
major customers taking their business elsewhere
internal and external theft
data loss
major weather disasters

However, one of the most important factors is the ongoing availability and capability of the business principal/s.

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Key Person Insurance

When a small business is dependent upon the work of one, or even two people, what happens in the event of their illness must be seriously considered. While individuals may be covered for income protection, ongoing business costs also need to be covered if revenue stops.

Typical expenses include rent, wages, advertising, accounting fees, business risk insurance, equipment leasing, telephone and electricity.

Each business has its own unique expenses. Some items require special consideration, particularly if there may be a personal use factor. This could apply to the leasing of motor vehicles, mortgage payments or use of a home office. Employees may also be less productive in the absence of their employer.

In these instances it is important to obtain professional guidance when establishing the policy to ensure full and correct cover in the event of a claim.

Could this be you?

Bill and Ben operated a small manufacturing business. Their personal skills and experience were highly complementary with Ben supervising manufacturing while Bill handled administration and marketing. They recognised the risks of one becoming unavailable and after taking appropriate advice, entered into an appropriate buy/sell agreement including taking out a “Key Person” business risk insurance policy on the life of each partner.

Shortly after, Ben died in a car accident. The proceeds from the policy on Ben’s life enabled Bill to buy Ben’s share and pay out his widow. Without this, Bill would not have had sufficient funds available and may have been forced to sell the business.

You might be a busy business owner, but don’t get too busy to settle the important things. Talk to a professional adviser about the potential business risks and the protection available.

Financial Planning Licence

Leenane Templeton Wealth Management Pty Ltd is a Corporate Authorised Representative of Lonsdale Financial Group Limited. Australian Financial Services Licence Number 246934, ABN 76 006 637 225.