Here’s a sobering statistic for you.
The number of business closures in the UK between April and June was 113,700.
Year-on-year, that’s an eight per cent increase – and you’d have to be the most hopeful of optimists to think that in the current economic climate, things are going to get much better in the foreseeable future.
A fair chunk of those closures came in the retail sector but the Office for National Statistics data reveals that the failures were spread across ten of the 16 main industrial groups.
Unlike the pandemic – which came out of a clear blue sky and was almost completely unpredictable – we’ve got plenty of information about the economic challenge which is facing us over the next two years.
With the prospect of a sustained recession, high interest rates and inflation and a cost-of-living crisis, there is no excuse for every business, no matter what size or sector, to make sure it has all the protection it needs to weather the financial storm.
And yet figures from Vitality suggest that 37 per cent of all the UK’s businesses have not yet taken any protective measures.
My bet is that a fair proportion of that 37 per cent would be vulnerable if their business lost just one or two of their most important people. Some straightforward Key Person Cover – which protects your business in the event of death or critical illness of one or more key employees – is a simple way to ensure you limit your exposure.
You can tailor it to your needs with varying levels of protection and in the event of the worst, it pays out a lump sum to cover any loss in revenue or profits.
I’d also wager that many of those unprotected businesses have finance they are still repaying. Without some form of business loan protection, this is another area of real risk for lots of companies, particularly SMEs.
Business loan protection is essentially a life-insurance policy with critical illness as an option. It will give the business the funds to repay commercial loans or mortgages in the event that one of the owners is taken seriously ill or dies.
It provides real peace of mind at a time of maximum risk for the business and should be on every business owner’s list of things to seriously consider.
And how many of you have shareholder protection in place?
If you have multiple directors, each with shares in the business, this is a must if you want to ensure you retain control of the company moving forward.
Shareholder protection makes sure that there’s money available to buy the shareholding of the business if an owner dies or is taken critically ill. Without it, the shareholding can pass on to family members meaning that anyone else with shares could lose control of part or all the business.
By taking protection, you can still compensate the family of the bereaved shareholder but eliminate the risk of the shares passing out of the original shareholding group to people who may have little knowledge or interest in the business.
There’s no better way to make sure that you do the right thing by the family of your owners, whilst still making sure that the integrity of the business is retained during the most trying of times.
There are plenty of other ways you can get yourself protected too and the good news is that it’s never too late to start putting protection in place.
If you’re not covered or feel you are over-exposed at the moment, you can put it right almost immediately.
So start now. That way you can face up to the next two years with as much confidence as anybody in this uncertain world.
Q Mortgage & Protection is part of Q Financial Services, based in Wellington and Shrewsbury. For more information visit https://www.qfinancialservices.co.uk/