A Two-Pronged Financial Preparedness Stategy Guide
Small businesses are the economic engines strengthening thousands of communities with jobs.
In the U.S., small businesses create as many as 80 percent of the net new jobs and employ more than half of all Americans.* Yet one in four businesses never reopens following a disaster. To maintain stability and strength during an emergency, business owners must take stock of their needs and readiness in advance.
Before a disaster strikes, it's important for business owners to protect what matters most: their people and their property. Many owners insure their property without hesitation but don't think about protecting their most valuable asset: their workforce.
These 5 steps help owners to identify risks and provide sound solutions to ensure stability amid turmoil for the people side of the business.
1. Protect the Owner
Many businesses rely heavily on owners to survive and thrive. Yet many owners can't imagine what would happen if they suddenly couldn't work due to an illness or accident. Disability insurance coverage can provide benefits to help keep a business operating with minimal interruptions.
2. Protect Key Contributors
A business' success is often based on a select group of employees. The disability or death of one of those key contributors could be devastating to productivity, credit rating, customer relations and business continuity. Protecting your key contributors with disability insurance and life insurance can provide the income and assets needed to strengthen cash flow, hire and train a replacement, and assure creditors of business continuity.
3. Retention with Protection
Employees are arguably a small business' most important asset. Owners may enhance employee retention efforts by providing protection. Offering employee benefits — group health insurance*, group life insurance, retirement savings, disability income protection and long-term care coverage — can keep employees committed to a business, help them secure protection needed for unforeseen circumstances and provide resources needed for retirement.
4. Success with Succession
Business owners don't live forever, so a continuation plan is critical to keep a business flourishing from one owner to the next. A written and properly funded buy-sell agreement creates a market for business interests, provides mutually agreeable terms of sale, facilitates a smooth transition of management, and assures creditors of business continuity.
5. Access to Cash in a Crisis
In a disaster, gaining access to financial resources can be crucial. Business owners who own permanent life insurance policies build equity over time as they pay premiums. This cash value can be accessed for emergency situations, for business needs, or used as collateral for a loan, helping owners maintain their financial security in the aftermath of a disaster.
An integrated preparedness financial plan, should include other measures such as:
- Ensuring access to materials from suppliers in a disaster
- Insuring buildings and equipment
- Maintaining emergency response equipment, and
- Preparing for a power outage
Owners should keep a detailed list of all insurance policies, including insurance company name, agent name, contact information, policy type and benefit amount. The list should be evaluated annually to ensure that both people and property are protected.
With over 150 years of risk management experience, helping people protect against the unexpected is Northwestern Mutual's expertise. The company works with businesses across the U.S. to develop flexible solutions that adapt to owner's needs and goals. For additional information contact your financial representative or www.nmbizsolutions.com