Business is not always about business. A big part of business success — and that’s business of any size — is planning. Long term planning to be exact. One of the reasons many struggle or even fail — according to the 2015 MassMutual Business Owner Perspectives Study — is not knowing where to go for advice.
It says business owners are busy improving operations and taking care of employees and setting up retirement scenarios for themselves. What they aren’t doing — says the study — is preparing for when they do retire. Shockingly, said spokeswoman Tara Reynolds, is just 44% have buy-sell agreements in place.
“We found that business owners are spending the majority of their time working in their businesses instead of on their businesses. It’s never easy to think about death or disability, but in order to raise awareness about these longer-term issues, business owners need to be confronted directly with the potential risk and damage of unexpected events,” she said.
The study found 44% worry about the death of either themselves or a key employee. When it comes to disability of the same, 42% expressed concern. What’s disconcerting is 55% rarely or never think about disability and 59% never think about the effect of death.
Keeping key employees is top of mind. Two-thirds think about it frequently and 81% say keeping those employees in the company and loyal is a top concern. Almost all — 90% — offer benefits like health insurance (60%), good salaries (55%) and flexible work benefits (51%).
Even more interesting is 40% not having a retirement income strategy and will have to rely on the proceeds from the sale of the business to survive after retirement. Most say they’ve chosen a successor and a huge percentage of the time it is a family member. What many haven’t done — 25% — is informed that family member of the succession plan.
Not only are all businesses poor at long term planning, but small businesses in particular are also not so good at planning for disaster. A Nationwide survey found 75% of small businesses — those with up to 300 employees — don’t have a disaster recovery plan in place.
Just 18% of those with 50 employees or less say they have one.
Nationwide Direct and Member Solutions president and CEO Mark Pizzi said a whopping 66% say on top of not having a plan, they do not have business interruption insurance either. That — he says — could be costly. “Small businesses are least likely to have disaster recovery insurance. And yet they are the ones most affected by a disaster. That’s why it’s essential for small businesses to have a disaster recovery plan,” Pizzi said
Here’s what the survey uncovered:
• Over half say it would take them at least three months to recover from a disaster.
• That said, 38% don’t think it’s important to have a disaster recovery plan.
• Why? 26% say there is a “slim” change a disaster will happen in their area.
• Another reason. 37% say climate change and El Nino make it less likely their business will be impacted by disaster.
• 69% admit to having a disaster evacuation plan at home.
• 34% of those without a disaster recovery plan say it is a low priority.
• 11% say time is not part of the decision to not have one.
• 15% say cost is not part of the decision not to have one.
• 44% don’t have access to generators if a disaster hits.
Source links: Carrier Management and insurancejournal.com