Tel: 074 912 4366
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Have you got the keyperson in your business covered?

Reconnecting with an old friend over the weekend, I asked her about her new company.

I was interested to hear that they record the knowledge of key individuals who work in different types of enterprises.

This makes sure that if that keyperson gets sick, retires, or passes away, the company has a permanent record of their priceless knowledge. In turn, the company can transmit that knowledge to future generations of workers.

The week before last, Aviva released statistics showing that two out of three Irish small and medium enterprises (SMEs) say that they rely on a single individual or a small group of individuals to generate profit. 

Half of them say that the death or illness of a keyperson would result in a loss of revenue for their business, while almost a third said that they would cease to trade in the short to medium term, or declare bankruptcy.

These startling statistics show how devastating it can be for a business to lose a keyperson. They also prove how important it is for small business owners to plan for the future.

Obviously, a good first step is recording the knowledge of a keyperson. The next step should be working out the monetary cost to your business of losing a key person, and taking steps to protect the business from that impact.

If you are unsure how to do this, consider how long would it take to bring someone up to speed and for them to really learn how to do the job. What would be required to train someone, or hire someone who has the same level of expertise, so that they who could bring in the same level of revenue as before?

Once you have this magic number, the good news is that you can set up a policy known as a keyman policy to help protect your business from the financial impact of losing a key person.

A good financial advisor like me can take you through the process of working out this number and discuss the options that may be best for your business.
If you are reading this and are concerned about the financial impact that the loss of a key person could have on your business, get in touch.

You can contact me on (074) 9124366.

Shona Chambers QFA RPA is a Financial Advisor and Retirement Planning Advisor with John McColgan Financial Services Ltd.

 

 

 

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