Parachute Policies for Mumpreneurs: Protect & Secure Your Business
So you’ve taken the leap, realised your ambitions & gone and only done it! You’re a Mumpreneur: Congratulations! Now the party is over & it’s time to get down to protecting, securing and growing your business.
Parachute Policies in Mumpreneurship: Planning for eventualities that can impact your business, reduce & even halt your income.
If you are the main facilitator & essentially the lead income generator for your business it’s extremely important that you consider the “What If’s” that may reduce or stop the flow of money into & out of your venture. Being “Future Proof” is a very sensible step & yet one that only 6% of small businesses & sole traders take. In this complex & rocky financial climate it’s important to do all you can to protect your business & its potential risks & growth indicators.
Key Person insurance: This insurance is for anyone who is a “Key Person” in the running of a business of any size. That person is the glue that holds the business together and keeps things moving upwards. If you are a sole trader: you are the key person to be insured. In partnerships where there are equal roles with another person or several other persons, you all have equal responsibilities & a good advisor would recommend you are all relevant applicants for key person insurance.
Income Protection Insurance This insurance is for anyone who has a regular income that they rely on significantly. For example most business owners run one main business & this income pays their mortgage, their childcare & other general living expenses like fuel, food & utilities etc. Whether you own a business or you work for someone else it is a useful protection product to maintain income just in case you become unable to work for a moderate or long period of time: for example after a severe illness, redundancy or accident.
Health Insurance: Similar to income protection but more specific to health & wellbeing, this insurance is for pay-out in cases of ill health ( in women it can be for issues like breast cancer, complications after child birth or post natal depression all of which can delay your return to work)- Premiums will depend on your current age & health. They can be very manageable if you are fit & healthy already & very worthwhile for anyone who is keen to protect themselves against future illness.
Life insurance: If you are in partnership with at least one other person, its important you consider them when you are looking at protecting the business you have built together. Should the unthinkable happen & one of you becomes terminally ill or dies, we would hope you will have put in place a life insurance policy that will cushion that blow to your business. It is a tragedy but it’s important that those left behind are not dealt a double blow by the bereavement & left redundant, with no way of recovering financially after your departure. A life insurance policy means the vast majority of not all credit agreements can be paid off with the insurance pay-out: for example a mortgage on your home, office or shop.
Contents & Assets: Do you use a computer in your work? Rent a small workplace or office? Do you/your staff have machinery, printing equipment or machine of any type? These are core assets to your business. Your business relies on these items to run day to day. Insuring your equipment may not be at the forefront of your mind but there are specialist insurance packages suited specifically for home-workers ( for example). We highly recommend you look at or take advice on costs & benefits of such financial products as a protective measure.
Debts: Everyone has some level of debt in this day and age. In fact, the average individual carries financial baggage ( Louis Vuitton?) weighing around £18,000 excluding mortgages. Many small business owners have credit defaults & debts from previous lifestyles and situations. It is nothing to be ashamed of but these weights can slow you down. If you are starting or have started a business and are now generating income you are in a good position to have someone look at your credit agreements & debts and suggest ways to manage them better, repay them sooner & even free up cash to help you grow your business more efficiently. Unemployed people ( who for example only have income from benefits) have little choice in the debt solutions & advice strategies open to them. People who are self employed & who have an income, have several extra repayment & settlement choices open to them. Discussing these with a professional debt advisor is a good step forward.
And finally.......Have you heard about the gender review of insurances? Equality has a lot to answer for! ( tongue in cheek...) as of December 21st 2012 women applying for new insurances of any type will be offered only premiums at the same level as men. Essentially this means, insurance costs for women are going up! Although women live longer and are generally healthier than men, new equality laws now dictate that insurances for either sex must be the same. If you have an insurance review before December 21st you will miss the hike for a while & stave off increased premiums OR you can wait until after December & experience the increase. If you don’t have any insurances in your name at all, you won’t really notice as there is no basis of comparison. Insurances affected are including life, car, income, contents, buildings & health to name just a few. Millions of insure-able women are unaware of this new legislation and we encourage them to have review asap to make sure they avoid increased costs as soon as possible.
The PlanB Partnership is afresh, quirky & creative financial advice & debt advice service that provides specialist money advice from regulated professionals almost always for free. They work with individuals, couples and businesses to address financial worries, arrange financial products & advise on financial security so those people/business owners can be more financially secure and capable for today & tomorrow. They are a unique not-just-for-profit social enterprise & are run by Lucy Haughey a mum to 3 boys aged 8, 6 and 1. The PlanB Partnership cap their profits & re-invest approx 80% of their income in free, community & workplace focused money advice & education services.
Next issue: Pensions:
The Good, The bad & The Ugly facts about pensions & plans for you & your team
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