When was the last time you had a conversation with the owner of a business with which you have a health insurance account? Have you popped the question of “what would happen to your business if….” lately? Where would your property and casualty account go if a business went under, sold for pennies on the dollar for the cost of inventory to a buyer of distressed businesses ?
Business succession planning is as important in a family business as it is in a public corporation. 97% of family businesses do not survive past the third generation, according to the Family Business Institute. Estate professionals say that wealth often doesn’t make it to the third or fourth generation not because of estate taxes or an inability to transfer the wealth, but because the generation that created the wealth was unable to successfully transfer the knowledge of how to create it and how to keep it coming in. Many times the initial owner is cut down in his/her prime by premature death or a disabling medical problem, draining the business with unexpected expenses and the loss of leadership of the business owner.
It’s very common for the first generation that creates the wealth to be followed by a second or third generation that only knows how to spend it. Without it, the child who takes the reins—either because s/he’s the oldest or the one who lives closest to home—may not be the most qualified. Moreover, the family members who remain with the family business are sometimes the kids who got D’s and F’s in college. They return to the family business after school because it’s the only place they can get a job.
Imagine the disaster to business and the incomes of all of the involved families (and employees) if there is no succession plan in place and the initial business owner dies prematurely or suffers a debilitating medical event, like a stroke, before he or she takes the time to put together a well-funded business succession plan. As a health agent or property casualty agent, you are a trusted partner to the business owner. You are in the best position to ask the important questions about business succession.
You don’t have to be an expert. Call Designs In Life. We’ll help you with the assessment of the situation, help you define the problem areas, and apply the best and most cost-effective insurance solutions.
Potentially, you could be a hero if the worst that can happen does, in fact, happen. Look over your accounts and make an appointment to see a business owner today.