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Entity's needs

All businesses operate within a business entity, whether it is a sole proprietorship, partnership, close corporation or a company.

The continued success and existence of this business entity is a real concern for most business owners. There are some common risks most businesses are faced with, which can be mitigated by proper financial planning.

There are two categories that these risks can be assigned to:

  • A risk that a business must be protected against
  • A risk that a business can make provision for

Protection can be put in place to reduce the risks that the death or disability of a key-employee holds for the financial future of the business which affects its:

  • Creditworthiness
  • Ability to maintain the on-going business expenses

On the other hand, the business can eliminate certain risks by making timeous provisions for:

  • Settlement of debts
  • Future expansion
  • Retention of staff

Momentum Entity protection and provision can reduce the risks; ensure continued success and the existence of your business entity by providing you with accurate financial planning assistance.

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Protecting against the loss of key employees

One of the most valuable assets of any business is its employees. A business invests a significant amount of money to find and keep good employees.

If a key employee dies or becomes permanently disabled, what will the financial impact be?

Business implications could include:

  • Loss of income that will impact profitability
  • Loss of clients
  • Compromise of creditworthiness
  • Expensive recruitment and training costs

Key person insurance

Key person insurance can protect your business against the loss of key employees.

It transfers the financial risk to the insurance company and gives your business the necessary funds to finance the loss of income and the cost of recruiting and training a new employee.

Securing business liabilities

Finance is a critical element when starting a new business, to secure working capital or to enable expansion.

Financial institutions often require business owners to provide personal suretyship for these facilities. The result being, if your business does not meet its obligations, it could compromise your personal estate.

In addition, if the guarantor dies or becomes disabled, it could affect the credit rating of the business and the financial institution could call up a facility.

Contingent liability cover

To secure your liabilities, your business can get contingent liability cover.

It will give you sufficient funds to repay the outstanding balance of a debt if the guarantor dies or becomes disabled.

This improves the business's financial position and frees the guarantor's personal estate from possible liability.

Securing cash flow

For any business, budgeting and related planning is a continuous process. However, if a business owner or key employee becomes temporarily or permanently disabled, it can have disastrous consequences on the cash-flow of the business.

It can affect the relationship the business has with its clients and financiers and, ultimately, compromise its future.

To safeguard the business, it is important to have a plan in place if the business owner is disabled.

Business overhead protection benefit

To protect yourself against a cash-flow shortfall, you should consider implementing a business overhead protection benefit.

It insures the life of the business owner or key employee against temporary or permanent disability and in the event of a claim, it pays the business a monthly amount to secure its cash-flow.

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Settling the business owner's loans

To finance operations and expansions, most business owners invest substantial sums of money in their businesses over time.

These investments often reflect as loans in the balance sheet and are unsecured. Generally, there is no formal agreement between the business and the business owner.

The loan is an asset in the estate of the business owner, so if he dies, the loan will be called upon.

This could mean that the business has to sell its assets to repay the loan or it might have to approach a financial institution for the capital.

Loan account protection

Loan account protection is a simple, cost-effective way to settle the owner's loan accounts upon death or disability.

It gives the business sufficient funds to settle your loans - without affecting the balance sheet and without the need to get costly capital.

Providing capital for future needs

The focus of any business is to meet their clients' expectations and fulfil day-to-day obligations. It could mean your business might need capital for:

  • Future expansion and growth
  • Asset replacement
  • Payment of dividends to shareholders
  • New product development
  • Marketing campaigns

A cost-effective way of providing capital for your future needs is through lump sum, annual, ad hoc or even monthly investments.

Options include:

  • Investo Endowments
  • Investo Sinking Funds
  • Investo Linked Investments

Contact your financial adviser today for more information.

Employee retention solutions

Employees no longer work for one employer for their entire career. Employers with valuable or key employees may find it very difficult to keep them, as their competitors might offer these employees better remuneration packages.

If an employee with special skills or knowledge decides to leave, the employer could suffer a financial loss.

Employers are realising that employee turnover can have serious financial consequences and that they need innovative ways to keep key employees.

While salary increases could be a short-term solution, it does not guarantee the retention of key employees.

Employee retention solution

A simple employee retention solution enables the business to pay periodic bonuses to its employees.