{"id":2123,"date":"2018-04-26T13:49:01","date_gmt":"2018-04-26T20:49:01","guid":{"rendered":"https:\/\/www.keypersoninsurance.com\/?page_id=2123"},"modified":"2024-12-12T22:11:47","modified_gmt":"2024-12-12T22:11:47","slug":"business-continuation-planning","status":"publish","type":"post","link":"https:\/\/webdesign.quoteplicity.com\/keyperson\/business-continuation-planning\/","title":{"rendered":"Why Consider Business Continuation Planning?"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\tBusiness continuation planning, also called business succession planning, is the comprehensive process of identifying all potential threats to the long term viability of an organization and implementing strategies to mitigate these risks.\n\nOwners of successful businesses must plan for contingencies that could negatively impact their company. Do you have a plan?\n

Why is business continuation planning so important?<\/h2>\nA 2017 US Trust, <\/strong>\u201cWealth and Worth Survey<\/a>\u201d<\/strong> of high net worth business owners, with company revenues of $1,000,000 to $100,000,000 million annually found:\n
\u201cMore than half (52%) of all business owners\u2014and, surprisingly, 65% of Millennial owners\u2014plan to exit their current business within the next three years.<\/blockquote>\nDespite having plans for the future of their businesses, a majority of owners (69%) have not crafted a formal exit strategy. Nor have they prepared for potential negative events. For example, 84% don\u2019t have a plan in case of a decline in their own cognitive capacity. Eighty-three percent aren\u2019t prepared to handle a substantial labor or wage lawsuit. Seventy-four percent aren\u2019t equipped to manage a sudden business downturn.\u201d\n\nA sound business continuation plan will thoroughly address all conceivable risks to the organization and employ strategies to respond accordingly. As the business owner, the process begins with YOU!\n\nYour goals and objectives for the company and your ultimate vision for the future drive the process. You have worked too hard to let the direction of your business be left to chance. It is time to get going!\n
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Major Reasons for Business Continuity Planning Include:<\/h2>\n
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  1. Minimizing Business Risk<\/a><\/li>\n \t
  2. Planning for Ownership Contingencies<\/a><\/li>\n \t
  3. Maintaining Control of the Business<\/a><\/li>\n<\/ol>\n<\/div>\n<\/a>\n

    Minimizing Business Risk<\/h2>\nIn strategic planning, \u201cSWOT\u201d analysis is the process of evaluating a company\u2019s Strengths, Weaknesses, Opportunities and Threats. Business continuation planning focuses on \u201cthreats\u201d to an organization\u2019s existence and works to minimize the risk.\n\nAn integral part business continuation planning is risk management. The focus is on identifying the perils that could disrupt a business or undermine its productivity and implementing the appropriate resolutions.\n

    A few examples of potential risks include:<\/h3>\n

    A death or disability of a key employee or executive<\/u>:<\/h4>\nAccording to the Small Business Administration<\/strong>\n
    “Small businesses account for 99.7 percent of all businesses in the United States.”<\/blockquote>\n
    \"Key
    Protect Your Key People<\/figcaption><\/figure>\n\nA large majority of small businesses rely heavily on the knowledge and abilities of one or two key people for the bulk of the company\u2019s revenue. In these cases, the loss of just one key person can undermine the existence of a small business.\n\nExamples of a key employee may include an inventor, scientist, exceptional salesperson, computer programmer, professional license holder, etc. In nearly every case, finding a capable replacement is challenging, time consuming and costly.\n\nIn terms of key people, the company faces two potential dangers which could devastate the business: the death and\/or disability of a key person.\n

    Key man life insurance<\/h4>\nKey man life insurance <\/a>is a relatively easy and affordable way to cover the risk of a sudden death of a major contributor. This insurance provides instant cash to the business at a most crucial time. The insurance proceeds can be used to meet short term obligation as well as to recruit, hire and train a qualified replacement.\n

    SAMPLE COST FOR KEY MAN LIFE INSURANCE<\/strong><\/p>\n\n\n\n\n\t\n\n\t\n\t\n\t\n\t\n\t\n\t\n\t
    Ages<\/b><\/center><\/th>
    $250,000<\/b><\/center><\/th>
    $500,000.00<\/b><\/center><\/th>\n<\/tr>\n<\/thead>\n
    <\/td>
    Exam<\/b><\/center><\/td>
    No Exam<\/b><\/center><\/td>
    Exam<\/b><\/center><\/td>
    No Exam<\/b><\/center><\/td>\n<\/tr>\n
    <\/td>
    M<\/b><\/center><\/td>
    F<\/b><\/center><\/td>
    M<\/b><\/center><\/td>
    F<\/b><\/center><\/td>
    M<\/b><\/center><\/td>
    F<\/b><\/center><\/td>
    M<\/b><\/center><\/td>
    F<\/b><\/center><\/td>\n<\/tr>\n
    30<\/b><\/center><\/td>
    $107<\/center><\/td>
    $100<\/center><\/td>
    $154<\/center><\/td>
    $119<\/center><\/td>
    $155<\/center><\/td>
    $140<\/center><\/td>
    $210<\/center><\/td>
    $150<\/center><\/td>\n<\/tr>\n
    40<\/b><\/center><\/td>
    $127<\/center><\/td>
    $125<\/center><\/td>
    $187<\/center><\/td>
    $161<\/center><\/td>
    $195<\/center><\/td>
    $185<\/center><\/td>
    $273<\/center><\/td>
    $203<\/center><\/td>\n<\/tr>\n
    50<\/b><\/center><\/td>
    $275<\/center><\/td>
    $223<\/center><\/td>
    $312<\/center><\/td>
    $263<\/center><\/td>
    $485<\/center><\/td>
    $395<\/center><\/td>
    $525<\/center><\/td>
    $438<\/center><\/td>\n<\/tr>\n
    60<\/b><\/center><\/td>
    $663<\/center><\/td>
    $490<\/center><\/td>
    $785<\/center><\/td>
    $564<\/center><\/td>
    $1,225<\/center><\/td>
    $870<\/center><\/td>
    $1,463<\/center><\/td>
    $956<\/center><\/td>\n<\/tr>\n
    65<\/b><\/center><\/td>
    $1,105<\/center><\/td>
    $768<\/center><\/td>
    N\/A<\/center><\/td>
    N\/A<\/center><\/td>
    $2,110<\/center><\/td>
    $1,400<\/center><\/td>
    N\/A<\/center><\/td>
    N\/A<\/center><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

    Key man disability insurance<\/h4>\nKey man disability insurance<\/a>, while not as readily available and a bit more difficult to obtain, can protect the business if the key person is afflicted with a serious illness or sustains a debilitating injury. The insurance provides a monthly cash payment to the business until the key employee recuperates and returns to work. Funds can be used for any purpose but normally are used for recruiting and training an equally talented replacement.\n\nKey man life insurance and disability is NOT just for employees. If an owner is also a key person, there is a strong likelihood that the business will need funds to recruit and train a capable replacement.\n\nKey man insurance is a foundational component of business continuation planning and should include both life and disability insurance policies for each key person. Many companies only consider key man life insurance and forgo key man disability coverage. However, buying one policy without the other is leaving your company exposed to devastating consequences!\n\n\t\t
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    Losing a key employee to a competitor<\/u>:<\/h3>\nWhile there is nothing to prevent a key executive from leaving your business for a better opportunity, there are strategies that you can take to make it a bit more difficult. Providing executive benefits to your top performers<\/a> is an excellent way to endear them to your company and creates a barrier against losing them to a competitor because they feel underappreciated.\n\nExamples of executive benefit plans include executive bonus arrangements, non-qualified deferred compensation plans, salary continuation plans and supplemental executive retirement plans. These extra financial incentives are intended to encourage top executives and key employees to remain with the company for a stipulated period of time.\n\nEffective business continuation planning rewards top level employees and provides the perks to show them how much they are appreciated.\n\n

    The threat of a lawsuit<\/u>:<\/h3>\nAnyone that has ever been involved in a lawsuit knows a couple of things for certain: anyone can sue anybody for any reason at any time regardless if it is justified and lawsuits will cost a fortune.\n\nWhat if, a customer, competitor or investor sues your company for a misrepresentation or breach of duty? Or, an employee sues your company for discrimination, harassment or retaliation?\n

    Directors and Officers Insurance<\/strong><\/h4>\n