Dave had a booming business, but because he’d always been successful, he failed to plan ahead. Admittedly, he was extravagant and his budgets were bloated. But Dave was confident that if he needed money, he could always ramp it up and sell more. His modus operandi worked well for him through the 90s and early 2000s.
But when 2008 hit, bringing with it The Great Recession, the phones stopped ringing and cash dried up. Dave struggled to keep his company running, laying off employees who had become good friends, and making deep cuts to budgets which threatened future growth. Also, he moderated his family’s comfortable lifestyle. It was tough to see them suffer simply due to his lack of planning.
The Past Does Not Predict Future Income
While your company may have been generating predictable, healthy revenues for years— enough to support you, your family and your employees—that doesn’t mean the cash flow will continue without interruption. Some factors, such as the economy and your health, are beyond your control. If you or one of your partners is unable to work for an extended period due to illness or an accident, your business’ revenues could be at stake.
Without income protection, when revenues dip, you may need to liquidate the assets that you have worked so hard to build. In the worst case, you may be forced to sell your business. And if you sell at a time of desperation, you are less likely to attain your desired price.
Critical Components of Income Protection
At Financial Solutions for Business, we’ll help you to put the necessary protections in place, so you’re prepared for the worst. In addition to all the other building blocks included in The Ultimate Business Owner’s Plan, we may recommend:
- Equity Stripping– Equity stripping can protect your assets by substantially reducing their value to creditors. This involves ensuring you control your assets without retaining a substantial stake in them. The purpose of equity stripping is to make it difficult and expensive for creditors to get their hands on your property or other assets.
- Disability Insurance– There are a variety of disability coverages available. The most well-known is insurance that provides you with an income to cover your needs in the event of a disabling illness or accident. Insurance is also available to cover buy-sell agreements, enabling you to buy out a business partner who is disabled permanently. In addition, you can get insurance to provide the cash for operating expenses while you’re disabled. Also, to keep those creditors happy, you can invest in business loan protection that assists you in paying off loans while you’re unable to work. We’ll provide you with guidance on the protection you need for your business to ensure you’re covered through difficult times.
We’ve been assisting our clients with income protection for over a quarter century. So, we know the ins and outs of this complex area. Rest assured that we can map out a course to safeguard your income.
To learn more about income protection, schedule a complimentary consultation now.