Protecting your key people is always a worthwhile move
QUESTION: What sort of plans should I be looking to put in place to protect my business from unforeseen events?
Katherine James, general manager, Wealth Management & Private Banking at Northern Bank replies:
Good business planning involves considering the many circumstances that you could potentially be faced with in the future.
Many businesses already have insurance or disaster recovery plans in place to safeguard those items vital to your day to day business, such as premises, IT, equipment and vehicles.
Have you thought about your people?
It’s hard to imagine what the impact to your business would be if a senior or key member of staff were to suffer a critical illness or die prematurely.
Profits, clients, business loans, plans for the future are all at risk without the right kind of business protection.
There are three main types of business protection:
Key person protection — designed to compensate your business for loss of profits on the death, critical illness, or disability as a result of sickness or accident of a key employee.
Shareholder/partnership protection — if a major shareholder/partner dies, business protection can help ensure
that control of the business remains in the hands of its surviving shareholders/partners. In return, the deceased’s estate will receive the cash value of their holding.
Business loan p rotection — whether the loan is being taken out by an individual or company, business loan protection will help ensure money owed can be repaid, upon death or critical illness of the life assured. This is particularly important as your family’s finances and your estate could be drawn upon to help repay a loan.
You can’t mitigate all of the uncertain
ties in business but protecting your key assets — your people — makes good business planning sense.
QUESTION: I am seeking finance for a business idea and have been asked to prepare a business plan. Have you any advice on preparing one?
Derick Wilson, business development manager, Ulster Bank, replies:
When seeking finance from your bank you generally won’t be walking into a Dragon’s Den. We are keen to hear from good businesses and are extremely receptive to good ideas.
However, it is worth bearing in mind some of the comments and criticisms made on the BBC television show Dragon’s Den when preparing a business plan as many of these are extremely relevant.
Some of the most frequent questions, comments and criticisms the Dragons make relate to the need to be able to provide coherent and specific information on the business market in terms of market size, underlying trends, competitor activity and challenges to effective marketing.
In your business plan this kind of information should be presented concisely and succinctly, with key details highlighted.
Information about yourself is also extremely important. As the investors on Dragon’s Den always say, a financier is investing in you as a business owner as well as your idea.
You should cite your relevant experience and past achievements as well as including a section on key staff and organisational structure.
In addition to being confident in the business idea, the reader needs to be confident in your ability to execute your business objectives.
In addition, you should ensure that you don’t assume that the reader has
knowledge of the subject you are writing about. Describe your product and opportunity clearly and include an industry overview to provide context and illustrate growth potential.
Other key elements to include are a comprehensive marketing plan and an overview of financial projections within the plan, with detailed accounts in the appendices.
You should also establish exactly why you require the finance you are seeking and illustrate your repayment capacity, stating your refinancing goals clearly.
Foremost amongst your concerns will be how they can expect to get their money back.
You should also ensure that you are realistic and outline your weaknesses as well as your strengths.
Don’t overestimate your sales and don’t underestimate your costs. Plan for setbacks and show contingency scenarios if revenues don’t match expectations.
Present your business plan professionally — typed and bound and easy to read. It should include a title page with your contact details, a table of contents, a clear structure and a conclusion.
Grammatical and spelling mistakes need to be avoided so it is advisable to get someone else to read the plan before it is submitted.
Finally and most importantly, have faith in yourself and your ideas and don’t sell yourself short.