What happens if my business partner cannot work?
As co-owners, you are both indispensables. What will happen if your partner has an accident or suffers from a severe illness? What will happen if an unforeseen event prevents him from providing his share of the effort?
According to Darren Devine, president of Devine and Associates Financial Services, business owner insurance can be a big help: “The business receives the cash it needs to facilitate the replacement of a critical partner.”
With this type of cover, you receive the necessary funds to hire a headhunter who will find a replacement, for example. The allowance may even cover training costs for the new partner or employee in addition to ongoing expenses, such as salary, during the transition period. So you can focus on your business activities without worrying about your finances.
What happens if my business partner dies?
Business owner insurance helps you continue your business in the event of your partner’s illness or accident. You must also ensure that you can retain ownership in the event of the partner’s death.
Your attorneys may have already included in your business contract a buy-sell agreement, a type of provision that allows you to buy out your partner’s share after they die. However, sometimes the terms of the agreement only cover the sale of the business. It would therefore not provide financing for the buyout.
What happens if you can’t afford to buy out your partner’s share fully? This is where life insurance comes in. “Life insurance can protect you, your business and your family,” says Devine. It is enough that each business partner is the beneficiary of the other.”
With an adequate life insurance policy, you will have the funds necessary to become the sole owner if your partner dies. And if you die, your partner will receive an amount to buy out your share. In addition, the cash value of a life insurance policy can help your family maintain their standard of living and pay for the expenses you were covering (mortgage payments, rent, children’s school fees, for example).
Does my business partner share my vision?
Even if two partners share values and objectives, they must ensure that they have the same vision to achieve them. “To go where you’ve never been, you need a map. The entrepreneur’s map is the financial plan,” says Devine.
In the beginning, an advisor can help you create a plan based on your business goals. You and your partner will then be working towards the same purpose. This will optimize your efficiency.
A financial security advisor, what is it for?
Your advisor can serve as a barometer for complex decisions as your business grows. For example, it might tell you about new tax deductions for small businesses. It can also help you separate your finances from those of your business. “A trusted advisor can help you understand your options. You and your partner can then assess the advantages and disadvantages of each as a team and also find the fastest and most efficient way to grow your business,” says Devine.
