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Business Risks Part 1

Business Risks Part 1

Scott Robinson of Sabre Financial says ‘In the first of a series of articles I discuss the risks that your business may be running should you be in the unfortunate position that one day a key person in your business dies or becomes critically ill’

For example, if your business partner suddenly died, would the business have to find the money to pay back loans? Or if you became critically ill, would there be the funds to pay a replacement to ensure the business is still performing when you recover? Could the business afford to continue to pay the salary of an incapacitated individual or do you have the money to purchase their shares of the business from their estate? The sad truth is that such an event could prove catastrophic.

Small businesses form the backbone of the UK economy, with small and medium-sized enterprises (SMEs) thriving in almost every sector of business, be it retail, construction, financial services, IT or health.

Running an SMEcan be hugely rewarding, both personally and financially, but it’s a big responsibility and it isn’t without risk. Whether you’ve been in charge of a successful business for several years, or have only recently started up your own enterprise, it’s important to understand the challenges and potential pitfalls, and to think of ways of minimizing their impact.

There are several different types of business structure in the UK, all governed by different rules which determine the legal status of the business and how it is run: for example, the amount of tax you pay, who is entitled to the profits and who is liable for any debts run up by the business. The three main types of structure are; Sole trader, Partnerships & Limited company.

If you are already running a small business, it’s highly likely that you will have some form of commercial insurance in place. For example, if you have staff, it is obligatory for you to have employers’ liability insurance; similarly, any com­mercial vehicles will need motor insurance.

You can insure your premises, your IT equipment, your stock, any specialist machinery and so on. However, these same companies are far less likely to insure the health, or the lives, of the key individuals who keep the operation running.

Next month Scott will discuss how Business Loan Protection can help cover any type of commercial debt in the event of death or critical illness of an owner, partner or director.

If you would like to speak to Scott he can be contacted on 01548 856444 or by email at scott@sabrefinancial.co.uk.

Sabre Financial is a trading title of Sabre Financial Planning Ltd. Sabre Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.

 

 

 

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