New in Business? Do You have a Business Partner?

Setting up and going into business with likeminded partners can be one of the most exciting and rewarding venture you can do however, there is a particular risk that can derail the business that could lead the business into trouble that cause it struggle and go belly up. 

 It is normal for business partners to plan, talk about what they want to achieve and how they are going take the business forward, and what is it they want to achieve with the business. These are very common ongoing discussions business owners have.

There is one thing they do not talk about and question. What happens if one of the business partners was to pass away or become disabled? Let’s be honest it’s not a very exiting topic however, the death of a business partner can place an unforeseen considerable strain on the remaining partners in many ways. 

It does not matter whether the business is a café, bakery, cabinet making or an accounting / legal firm, if there are partners that have all borrowed to start up the business or leveraged to grow the business further, if the sudden death of a partner occurs without a proper thought-out plan, this can be a massive risk to all partners. No to also mention the deceased partner’s family that are left behind that may want their share of the business to be paid out.   

Without a proper structured Business Succession agreement (Buy / Sell agreement) in place along, with the proper funding options, the remaining partners may not be able to buy the deceased share of the business. They may find it hard to refinance or borrow further that could result in the deceased’s partner or family members becoming active within the business, even though they may not have the right skill set or be the right fit to continue with the remaining partners. 

It is therefore critical for business owners / partners seek out and put in place a Business Succession / Buy Sell agreement that will require the aid of a Business Insurance Risk Specialist, your accountant to value the business plus a lawyer to prepare the legal agreement for all partners. The agreement of course would include what will happen should a partner become deceased, disabled, or need to exit the business for other reason after a period of time.

Statistically speaking the more people there are in the business structure and the greater their differences in age, the higher the risk of facing the unexpected death or disability of a business partner.  It’s not hard to put all the above in place, but it does need to start with a discussion about the what if something dreadful should happen to a partner?

A Business Insurance Specialist can help make the whole process as easy as possible, walk you through your tailored strategy and help put all in place so you can get on with business. Consulting with one could be the best business decision you make.