Succession Planning

Every Mortgage Broking business is set up differently, however every business owner should know the answer to the following questions:

• Who will run the business if something happens to you, your business partner or your key employee
   
• Will they run it as well as you can?
   
• Will your business debts be paid off? 
   
• If your business partners were to die who will inherit their share, and can you work with them?

It is important to be aware that the person who creates the debt is responsible for the debt. Many business owners neglect to arrange debt protection for their family's and/or business partner's sake.  

Make sure your plan covers the key people in your business 

The most valuable business asset is the one that produces the most profit - In most cases this is the people. Material assets can be easily replaced, staff can not.

The loss of a key personnel can have a substantial impact on profitability, operational management and the goodwill of your business. Many businesses also find there are no suitable candidates readily available within the organization and it can take substantial time and money to recruit and train an external replacement.

A plan that covers your key people can help to minimise the impact of a valuable employee, if your plan includes insurance cover is can also provide an injection of cash for a revenue or capital purpose.

Just like a person your Business requires a Will

Establish a Will for your business by creating what is known as a Buy / Sell Agreement.

A Buy / Sell Agreement is a legal contract which can facilitate the orderly transfer of a person's share in a business to the remaining owners when certain trigger events occur (such as death or serious disability).

To help fund the transfer, the agreement normally uses life insurance so that sufficient capital becomes available to buy out the departing owner's share in the business.  

Planning to keep your business running 

While income protection insurance should still be considered, it's also important to protect the very thing that generates your income - your business.

By taking out business expenses insurance, you can cover certain ongoing expenses and keep your business running while you recover. If you are an independent broker or in a partnership, business expenses insurance can help you meet 100% of your share of eligible business overheads, should you be unable to work due to illness or injury.

This can help keep your business afloat and ensure that, in the worst case scenario, there is still a business to sell should the need arise.Expenses that can be covered with this type of insurance typically include, amongst other things, office rent and mortgage payments, equipment or vehicle leasing costs and utility bills such as electricity, heating and water.

What next?

There are plenty of great tools online to assist in your Succession Planning, many of them available for free. To find them simply type in "Succession Planning" into the search engine below the left menu.

If, once you have considered all of your options, you decide that your exit strategy will involve an valuation of your business or you are interested in selling you business, it is recommended that you seek the assistance of a professional business consultant.

Accredited broker are very happy to offer a 1 hour free consultation with our business consultant to help figure out if we can assist you further. Please complete the Web Inquiry form to arrange a time.