The UK’s network of small business play an important part in the British economy and represent the majority of businesses within the UK.
However, new research from insurer, Legal & General has found a serious lack of awareness amongst SMEs about business protection.
Their latest study has revealed that around 40 per cent of businesses would cease trading in under a year if a key person died or became critically ill.
The study also revealed that when businesses wanted to learn about business protection, over three quarters would turn to either their accountants or an adviser.
With this in mind many business should take steps to have a robust succession plan in place or at least an agreement about what should happen should the worst happen. This plan should address:
- What would happen if an owner was to unexpectedly die or become critically ill?
- Who would inherit the shares and what would they plan to do with them?
- What would happen to customer relationships?
- Are the businesses skills all held by a single person?
SMEs also need to consider where debts are held within a business, as it is not uncommon for business owners to provide guarantees to lenders, such as a secured loan against their home or another asset, which may not be available in the event of their death.