If you own or operate a small business what are the risks to you from losing a key person? How will it affect your lifestyle, your investment and are you the key person?
A key person is someone who is crucial to the survival of the business. Often they have an intangible value as they possess knowledge and expertise that is vital to the business. If they are not present there can be a loss of confidence and good will towards the business. This can result in a down turn and ultimately lead to finacial instability and loss of the business.
How likely is the loss of a key person can depend on the age, type of work and the amount of stress in their jobs. It is surprising how vulnerable senior executives are to accidental injury: older people can injure easily and take longer to heal. They are more susceptible to heart attacks and degenerative disease.
If you lose your key person it is vital to take quick action, communicate with your customers and put in place a recovery plan. While part of the strategy to manage this risk is having a culture to allow the company to operate without the key person for a time it is also a gooid idea to have some external resources that can assist.
This is where key person insurance come in, it provides addistional cash into the business to replace the key person, provides resources for the staff that are left to pick up the reins and ensure that the business can continue untill the key person is able to return.
