Do you believe the modern stigma that insurance never pays out?

3rd October 2017

By Martin Byrne,
Business Protection

The PPI scandal and ‘comparethemeerkat/ moneysupermarket’, have so tarnished the reputation of an industry that more often than not gets all lumped in as one, with consumers unable to see any difference.

“It’s all insurance right?  I’ve never had anything go wrong with me for the last 20 years, so why do I need it? I don’t plan on getting ill, we’ve got a shareholder’s agreement. I’ll go to the bank after the disaster happens and they’ll lend me the money to buy out my critically ill partner’s share… won’t they?”

Well as the old rock ‘n’ roll saying goes, you are only as good as your last gig.

Think of your business as a touring band. The cash flow is gigs and merchandise. Break your arm and be unable to play the guitar for eight weeks – your band and fans will potentially drift apart depending on what you’ve had to cancel – and the financial implications of your accident could have a dramatic effect.

Maybe it’s not even you. Maybe your drummer (a Key Person in the band) breaks a leg, your bass player is just too ill to play for a few gigs (short term group Income Protection), or your tour manager gets headhunted by a bigger band. Any reason, no matter how big or small, that interrupts the ability to generate cash … the lifeblood of a business.

There are so many factors that can have a financial impact on you and your business, which are totally out of your control. If you don’t think about mitigating the risk, you are on a risky knife edge that means one unplanned event could see the whole show crumble, like Ozzy Osbourne after a 24-hour bender!

We all cover our house, our car, our pet, our contents, our phone, our tablet … and of course our guitars! And what about covering the ‘thing’ that pays for all of it, you, your business and your staff. That’s what business protection is.

The upshot is this, there is no difference between your personal assets or your business assets. As a business owner they are inextricably linked. You have to cover your assets! I’ve found that the lack of Business Protection in a UK business is usually for two reasons, people think it’s complicated and they think it’s expensive but the truth is that is not the case.

Here are my four golden rules for business protection:

  • It has to be to a budget. There is no point putting things in place you can’t afford on an ongoing basis. Six months or three years down the line if you hit a tough patch and cancel your insurance, you may not be able to get the same cover again if your health or circumstances have changed. So, don’t overstretch, consider what is a realistic, ongoing affordable budget. It doesn’t matter what the number is, it’s the right number. Before I even look at products I find out what is a realistic budget for business protection.
  • Something is better than nothing. Prioritise and cover off the most basic risk first, most people can’t afford the ‘ideal world’ straight off the bat. Yes, I’d like that Vintage 1964 Chet Atkins Gretsch, but it’s unaffordable, and my ’64 reissue Fender Strat will do the job for now. When I’m a rock star (and business is consistently good) I’ll get the Gretsch, the personalised plectrums, and the titanium flight case! For now…the Strat will do.
  • It has to be fit for purpose. It needs to do the job it is designed for, don’t buy the nice, bright shiny effects pedal because it looks good, and then find out that it doesn’t work with your other gear. For Business Protection that usually means tax-efficiency, trusts, the right amounts, the right deferral periods and ultimately, business survival, or if that’s not possible, family survival.
  • It has to be reviewed regularly. Six months is a long time in business, a year even longer, so what is fit for purpose now may or may not be so in a year. Have an annual review, even if it’s just to confirm what you have in place is still fit for purpose.

It’s just like making sure your kit is road worthy. You don’t want to turn up at Wembley for the biggest gig of your life, only to discover your amp has given up the ghost and you don’t have the money or time to get a replacement – all because nobody checked. You’d sack your roadie right… but then it’s too late anyway.

Don’t be scared of having a conversation about Business Protection. A good adviser will help you to make informed decisions about covering off the risk in your business and making sure that if ‘Plan A’ goes seriously wrong, you, your staff, your fellow shareholders and most importantly, your family, will have the financials covered.

For further information on how Core can help protect your business and your assets, contact Martin on martin.byrne@corebusiness.group