Darryl labrooy 7 scenarios (mistakes)

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Scenarios that will impact on you, your business and your family

INTRODUCTION

At Business Ownership Protection Specialists, we know first hand just how important it is to minimise the risks facing your business. With the rise in small businesses in Australia, never before has it been more crucial to protect your professional exposure and guard the financial legacy that you’re maintaining and building for your family.

We know you don’t want to throw away all your hard work, yet, all too often, we see business owners forgetting to stop and protect their family, business and financial assets against all eventualities.

This booklet has been written to make business owners stop and reflect upon their current arrangements and to quickly gauge if they, their business or their family are unprotected and therefore at risk.

Always protecting your best interests, Business Ownership Protection Specialists

CONTENTS

7 scenarios that will impact on you, your business and your family 1. Not having an exit agreement in place for voluntary departures 2. A lack of a formal agreement to deal with involuntary exits* 3. Not having a cash funded formal agreement for involuntary exits 4. No plan in place to extinguish debts/ liabilities due to the involuntary exit of business owners or their spouses 5. No formal strategy in place to deal with the involuntary exit of a key person in the business 6. Lack of a current formal agreement to deal with the distribution of wealth on the death of a business owner 7. No wealth management plan *Involuntary exits mean untimely death, total inability to work due to poor health or not being able to work full-time due to a critical health condition.

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Scenario one: NOT HAVING AN EXIT AGREEMENT IN PLACE – VOLUNTARY Departures

Are you in business with other people?

What happens in the event that one of the business owners decides to leave voluntarily, and there is no legal agreement in place to ascertain the value of their share holding or there is no ‘cash’ available to pay them out?

Could the business partners amicably agree a smooth exit?

Our Philosophy Always, have an exit agreement in place.

An agreement of this nature is usually devised with the help of lawyers and the business owners themselves. Whilst it may be perceived as time consuming and an unwarranted expense in the early stages, it could save you tens of thousands in the long run.

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Scenario TWO: A lack of a formal agreement to deal with involuntary exits

To what extent is your business prepared for an unfortunate event, such as long-term illness of a business owner or their spouse?

What would happen if one of the business owners were to suddenly pass away, be diagnosed with a terminal illness or have a debilitating long-term illness that requires them to take time away from the business?

How prepared for such an event is your business really?

Our Philosophy Always have a formal agreement in place.

Using the skills and knowledge of experts in these areas, we work closely with our clients to make sure they have peace of mind now and into the future.

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Scenario THREE: Not having a cash funded formal agreement for involuntary exits

Have you got a cash funded formal agreement in place to cover the involuntary exit of a business owner?

In the unfortunate event that one of the business owners had to leave the business due to death or ill health, how would you fund the value of their shareholding and manage their unexpected exit.

How would you acquire the financial resources to purchase their shareholding?

Our Philosophy Always have a funding mechanism in place.

For multi owner businesses, it is relatively easy to cover your business in the event one of your business partners becomes unwell or passes away without the need to borrow money.

For the sole owner business it’s getting the value for the business while the owner is unable to work in it.

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Scenario FOUR: No plan in place to extinguish debts/ liabilities due to the involuntary exit of business owners or their spouses

What about your business loans, leases and other finance?

How would you manage and/or extinguish these debts, as well as confront new financial pressures should one of the owners suddenly become unwell or pass away. Is your business so financially secure that you could keep the creditors at bay?

Without knowing it, you could be risking the on-going viability of your business by not having your debts and liabilities secured.

Our Philosophy Always cover the value of the debts/liabilities so if the worst happened the business wouldn’t suffer due to creditors chasing payments. There are a range of different funding mechanisms that can be implemented so you never place your business or family at risk.

Personal guarantees are a concern, and the need to have absolute certainty is critical at times, when you are most vulnerable.

Debts should last no longer than the person who created it.

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Scenario FIVE: No formal strategy in place to deal with the involuntary exit of a key person in the business

How have you protected the continuity of the business in the event of key personnel dying or suffering permanent health issues?

What if one of your senior management team became ill, injured or suddenly passed away, would the impact on your business be small or large?

If they were one of your strongest revenue generators what would be the impact on the business?

Our Philosophy Always have a funding mechanism in place to protect your business. For a small monthly fee, you can rest easy that this unlikely event could be managed with ease.

Of equal importance to protecting and creating certainty for the business, there is also an opportunity to consider looking after the family of the key person.

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Scenario SIX: MISTAKE 6 agreement to Lack of a current formal deal with the distribution of wealth on the death of a business owner On your demise, what about the distribution of your assets, including the value of your shareholding in the business. how do you minimise costs, tax and stress?

You have spent your working life building the value of your estate.

How much time have you spent planning its effective distribution so your family has peace of mind?

Our Philosophy Always have an estate plan in place for every shareholder dealing with the impact and outcomes on owners and their spouses. The thought of the value of your business ending up in the wrong hands‌ is simply not worth thinking about.

The loss of a business partner is dramatic and stressful for all parties, no one deserves additional pressures.

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Scenario SEVEN: No Wealth Management Plan

Every business is vulnerable to external and internal threats.

Curve balls, like economic down turns or changes in legislation can seriously impact your business’s financial outlook.

In this scenario, do you think your family could carry on their current lifestyle and could you continue to provide for them as you have done in the good times?

Our Philosophy Always have a viable and long-lasting wealth management plan that protects your family from the external pressures your business faces.

A viable and long lasting plan reduces your reliance on the fortunes of the business and creates an independent income stream for your family over time.

Sound investments provide the cash to maintain your current lifestyle even when your business may be suffering a downturn.

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ABOUT US Business Ownership Protection Specialists (BOPS) was established with the sole intent of helping business owners to protect their interests and make sure they are ready for any eventuality.

Founding Director, Daryl La’Brooy’s direct experience with business ownership issues has led him to believe that no business owner should go unprotected. With his own business, its mergers and demergers, coupled with his MBA and his passion for business resulted in the establishment of BOPS. The advisers of BOPS all have a strong belief that all businesses should be protected and are suitably qualified to offer this advice.

BOPS is able to help your business achieve peace of mind and security by organising the following: Exit Agreements (voluntary exits) Buy/Sell Agreements (involuntary exits) Funding Buy/Sell Agreements Debt Cover Key Person Cover Estate Planning A Wealth Management Plan Call us today for a complimentary chat about how we can help you to protect your various and important assets.

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BOPS Suite 5.02 448 St Kilda Road Melbourne VIC 3004

1300 558 783 03 9866 1323 www.bops.com.au info@bops.com.au