Protect your SME with a robust succession plan

Protect your SME with a robust succession plan

When you are running a successful business, the last thing you want to think about is leaving, however since no-one can predict the future, an exit plan makes good business sense.

If you look at the reality of the situation, you might need to leave for health reasons or you might simply decide to retire, handing over the reins to a family member, current colleague or even selling outright.

Whatever reason you may have to leave your business in the future, foremost in your mind is usually a fervent wish that your business continues to be a success, even without you at the helm. The problem is – how do you steer your company when you are no longer there?

Succession planning for SMEs

The solution is to organise a succession, or exit plan as it’s sometimes called, which outlines who will take over your business when you leave. A strategic succession plan will make the transition between yourself and the new owner smooth and uncomplicated, maximising the value of your business and ensuring that your business is positioned well for the future.

Unfortunately, many business owners don’t give any or little thought to succession planning, leaving them without any clear strategy to transition between owners. This lack of forethought can place their business in a very vulnerable position, until the new owner is finally able to grasp the helm themselves.

Who should step into your shoes?

Starting to think about where you see your business in the future, ignore the “who should take over” step and focus on where the business needs to get too and what qualities in a person do you need to make sure you get it there.

For example, having the right employees in your company makes great grounds for the right qualities for your ideal successor. You might be considering handing over your business to a relative, however If that person doesn’t have the right set of qualities to run your company, you will be putting your business in jeopardy.

Over time as your business develops, you may change direction or take advantage of new technologies. Therefore ensure your future of your business is at the forefront of your mind.

Once your ready to put your thoughts into actions and actually look for your successor, make sure that everyone knows that you will be leaving. This gives everyone sufficient time to become used to the idea and accept that you will be handing over the reins to someone new. If you try to keep your leaving a secret, you may find that key staff become disgruntled and may leave, jeopardising the value of your business and placing the transition at risk.

This is the point where your plan becomes extremely useful, because you may decide that a senior member of your staff is highly suitable to fill your shoes, or you might realise that none of them have the right combination of skills. In this case, knowing your plan will help you select the right candidate to ensure a smooth transition, keeping your business employees happy, who will in return, keep your customers happy.

To speak to an insurance specialist about your business needs, talk to an insurance specialist today.

General Advice Warning
The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.

SME Business Insurance

Business Insurance is used by many businesses, but it’s best suited to SME-type operators.

SME Business Insurance

What is SME Business Insurance?

Any business in Australia, including small to medium-sized businesses, will benefit from an added layer of financial security in the form of an SME Business Insurance cover. This provides owners and businesses with protection against financial risks and the loss of key assets. It also protects customers, employees, suppliers, and contractors.

Some types of insurance are mandatory, like Workers' Compensation, Professional Indemnity, or CTP Insurance for motor vehicles – these are called statutory insurance covers. Other types of insurance are optional, but they are important ways of reducing business risk and protecting your finances and assets.

What does SME Business Insurance cover?

Property Damage – cover ranges from fire, storm, lightning and other perils to any type of accidental loss or damage. The property insured includes damage to buildings, contents, stock, plant and equipment, raw materials, and consumer goods.
Business Interruption – covers weekly amounts or net profit loss and ongoing fixed costs following property loss or damage. Also referred to as Loss of Profits or Consequential Loss Insurance.
Burglary/Theft - covers break-in at the business premises and the damage is done, as well as theft of goods or stock;
Money - covers theft of money in various locations (during transit, in a locked safe, or in a private residence) at any time (within and outside business hours).
Liability - covers a variety of statutory and civil legal liability, including personal injury and property damage, environmental liability, management liability, statutory liability, professional liability, aviation, marine and motor vehicle-related liability;
General Property - covers specified portable property against accidental loss or damage once it is taken off the premises, within Australia or overseas;
Equipment - covers sudden internal derangement and accidental loss or damage to plant, equipment and machinery, as well as computer and other electronic equipment. Loss of stock and business interruption cover can also be part of this insurance.
Motor vehicle & mobile plant – covers registered and unregistered motor vehicles, mobile plant & equipment, farm equipment, construction plant, as well as attachments and trailers. This insurance can also cover loss of income, downtime and hire costs of replacement equipment.

Speak to an insurance expert

It is our business to understand your objectives, needs, financial situation and risk profile and provide you and your business with tailored risk and insurance advice.
This is how we work with your business:

1.   We analyse your objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions.
2.   With your input, we undertake risk assessments and conduct market research to determine the most suitable insurance product(s) for your key risk exposure.
3.   Your insurance adviser will present appropriate strategies and solutions and also negotiate and place insurance covers agreed.

Frequently Asked Questions

How can insurance help small businesses in Australia?
- In Australia, small businesses are encouraged to invest in business insurance to help protect their business from costly eventualities like damage to property and liability claims. Investing in a comprehensive yet affordable insurance policy promotes the continuity of the business in times of losses or great financial trouble.
What does SME stand for?
Small-to-medium enterprises (SMEs) are businesses whose revenue, number of employees and assets do not exceed a certain threshold. Each country or industry defines a set of criteria to determine whether an organisation falls under the SME category.
How can insurance help small entrepreneurs or SMEs, or how it relates to risk management?
Risk transfer is one of the treatment approaches in managing risks in business, and insurance is an example of risk transfer. It’s a strategy that SMEs employ to shift a risk or a liability from one party to another when that party specialises in managing a specific kind of risk/liability.
Why is insurance important for business owners?
Getting an insurance policy for your business is important, as it cushions or completely shields you from the hefty costs of certain unforeseen issues (accidents, damages to properties, effects of force), legal claims, and other liabilities. Without insurance, business owners might be forced to foot the bill out of their own pocket.