There are plenty of adverts, which aim to make people aware of the importance of taking out cover so that their loved ones are protected in the event of their death. There are also plenty of articles pointing out how important it is for people to make preparations for the possibility of them having an accident or becoming seriously ill. The same applies to businesses too. The loss of a key person could potentially devastate a small business and ironically, even if the loss was only temporary, due to illness, the upshot could be that the business winds up closing before they are well enough to return. Here, therefore, are three tips on steps to take to protect yourself against the loss of a key person.
Ensure that contacts are recorded and relationships maintained
Where are business contacts stored in your company and how are they maintained? If your answer to this question is either “I don’t know” or “in Outlook contacts” or anything along those lines, then you probably need to make it a priority to come up with a more sustainable solution with clearer visibility. A CRM system is the ideal tool for this job, but if you’re looking to do the job for free, it’s still possible, you could use something as basic as a spreadsheet (albeit with adequate protection). The key point is that you have an up-to-date contact list which can be accessed as appropriate by any authorised user (remembering data-protection legislation) and which contains all relevant information about the contact, including hard facts such as phone numbers and notes to cover less obvious details, such as why, exactly, they matter.
As a corollary point, encouraging employees to adopt good email habits and to use their calendars can make it a whole lot easier for someone else to step in if need be. This may entail sending key people off on relevant training courses so that they can get to grips with using email effectively (as opposed to just using it) and learn to appreciate the vital role this can play in business continuity.
Document knowledge and pass-on expertise
The most dangerous place to store knowledge and expertise is in someone’s head. If you have a key person who acts as a knowledge bank and/or skills bank for the company then you want to get as much of that knowledge out of their heads and into documentation as you possibly can and you also want to encourage skills transfer as far as you possibly can. These steps will help to cushion the blow if anything happens to them. You also want to look at exactly what it is that they do and have at least an outline plan in place for how to replace them in an emergency, for example by making use of external agencies.
Take out appropriate business-protection insurance
There are three types of insurance available to help businesses deal with losses of key personnel. The first is Key Person Insurance, which is essentially life insurance with the beneficiary being a business. Shareholder Protection Insurance pays out on the death of a shareholder and allows the living shareholder to buy the deceased’s shares. Business Loan Protection is rather like Payment Protection Insurance for businesses and makes a payment to help pay off any outstanding loans. Depending on the nature of your business, you may find you need some or all of these and deciding which forms of insurance you need and how much cover is required can be a complex task. Given the complexity and importance of getting this right, it can be very useful to take professional, financial advice.