If you incorporate life insurance into your business plans, there will be cash available, when needed, to complete a business succession plan. Many small business owners overlook the value and tax advantages of life insurance. Here are some myths that might be holding you back, too.
Myth 1: I can develop a succession plan when I have time.
Small business owners are often so busy fighting fires, they don’t have time to reflect and consider their successors and succession approach. Owners think they’ll one day magically have time to address that issue. But what happens if your right hand person becomes disabled, retires or passes away? Safeguard your business and consider covering key people with life insurance now.
Myth 2: Selling my business will be easy.
Valuing a business is complicated. It’s based on revenue, fixed assets, profitability and other items. You might want to set up a buy-sell that’s funded by life insurance. Life insurance will protect your family and company employees in time of volatility and great transition.
Myth 3: Dealing with succession planning is impossible with partners.
If you and your partners own the business, consider having them also purchase life insurance to ensure a seamless transition of ownership in the event a partner passes away.
Experts say only 20 per cent of businesses have life or disability insurance. In 2014, many are turning to life insurance as a great financial tool for exit plans. Consider life insurance for your company’s succession plans.