Legal & General and the British Chamber of Commerce release a survey on business protection
A recent survey from Legal & General commissioned through the British Chamber of Commence makes for interesting reading. The company surveyed over 1000 firms nationwide to gain a greater understanding of business owners opinions in relation to business protection.
51% of businesses had some type of corporate debt, the majority of which came from Bank loans. 46% of companies had no protection to cover these loans in the event of death or illness of the business owner/key members of staff.
Almost half of businesses had no formal agreement in place to establish what would happen in the event of the death of a business owner. 15% either didn’t know or were not sure if they had anything set up. Only 20% were aware that they had either a partnership agreement or articles of association.
69% said death or critical illness of a business owner would have the biggest impact of their businesses.
41% said the managing director was the key individual who contributed to profits.
30% said they thought that the business could survive no longer than three months on the death of a key individual who contributed to their profit.
64% of business thought their profits would increase over the next five years.
These findings suggest that many businesses need to consider if their existing arrangements are fit for purpose, the survey also suggests that many companies have not even considered their continuity or succession planning in any great depth. Whatever the economic climate this is an important area for owners to explore how their business might cope with the death of a shareholder, or if a guarantor was to suffer a serious illness to name just a few.
Anne McClean is a senior Financial Adviser at Nightingale Associates. The views given in this blog are personal to the author.
M&H LLP trading as Nightingale Associates is authorised and regulated by the Financial Services Authority.
Date: 9th October, 2009
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