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To build a business and keep the cogs turning smoothly, it is vital for business owners to understand that the success or failure of an enterprise ultimately depends on the people working there. From the operations personnel that create and deliver products, to the sales staff determining customer satisfaction, people are the most important assets of a company, some more than others because of the roles they play. A key person, with respect to any business, is someone whose presence is integral for the business to function efficiently. Which brings us to the following question: “Who is vital to the success of your business?“
All businesses have people who are key to their success and profitability, hence the term ‘key person’. To understand the importance of key people, you first need to have a thorough understanding of the structures and hierarchies that help businesses function. Key persons vary from business to business, depending on the type of business as well as organizational goals. As such, the key persons for any company can be decided only after careful evaluation of the position held by the employee and their contribution to the business.
Consider the implications to your business if a key employee were to become critically ill or even die. The result could spell catastrophe for your profit margins.
As a business owner, you need to be alert to all the potential threats to your business, including a threat that is often overlooked: the impact on profits that the loss of a key person could induce.
Consider the following officials-your top salesperson, you seasoned chief designer, your skilled technician, or your experienced financial controller-and the contributions they make to your business. Would your company be able to cope financially if the profits they generate were lost?
Most businesses would be badly affected if one of their key employees were to fall victim to a serious illness or an untimely demise. This can have a plethora of negative effects on the company’s morale such as diminished confidence in the business, loss of faith among remaining employees, withdrawal of credit facilities. You might also be forced to recruit or train a replacement, both of which are time-intensive processes. In very extreme situations, the loss of a key person might even result in the insolvency of the business and the possibility of personal liability.
Fortunately, it is possible to mitigate the risks by insuring your key persons under the right policies. Business owners around the world have circumvented disastrous eventualities simply by investing in life insurance at the right time. It has been proven time and again that life insurance functions as a simple and cost-efficient solution to help keep businesses going smoothly, irrespective of unexpected hindrances.
In a nutshell, the loss of a key person will affect the profit graph of the business adversely. Hence it is extremely crucial to a business to invest in the right type of key person protection policies to ensure minimal disruption to the business in the face of unforeseen emergencies involving company personnel. Life insurance also provides peace of mind to business owners, the people they employ, their families and their colleagues.