Business owners have numerous things to think about, from effectively managing daily business operations to caring for employees to planning for the unknown and more. One thing that may be an essential part of a business’s plan and risk mitigation strategy is to form a business continuation agreement. At Harvest Financial Planning, LLC, we provide financial planning services for both individuals and businesses, and can help your business form a business continuation agreement that makes sense. Reach us today to learn more about how we can help.
Parts of a Business Continuation Agreement
In its simplest form, a business continuation agreement is a legal document that outlines what will happen if a business owner dies or leaves the company earlier than expected. Depending on the type of business and the ownership structure, a business continuation agreement will addresses:
- What triggers the agreement going into effect? For example, is it just the owner’s death, or another type of event, that will activate the terms of the agreement?
- What will become of the owner’s or departing partner’s interest in the company? How will the owner or their estate be paid out? What will the cost of that interest be?
- How will stock be transferred from one owner to another?
- What other protections exist for other owners?
Business Continuation Insurance
It’s important to note that a business continuation agreement is not the same as business continuation insurance, although both are often part of a business strategy and risk mitigation plan. Business continuation insurance is a type of life and disability insurance that covers losses to a business that are incurred in the event that the business owner or another key executive dies or becomes disabled. It is often paired with a business continuation agreement because, in addition to providing insurance to cover losses caused by a disruption such as death or disabling, business continuation insurance can also be used to help businesses implement a specific succession strategy or business continuation agreement.
How Our Financial Professionals at Harvest Financial Planning, LLC Can Help
At Harvest Financial Planning, LLC, we recognize that your business has a lot to think about, and that creating a contingency plan and implementing risk mitigation measures can be complex and overwhelming. That’s where our team of financial professionals comes in. We can provide your business with the solid financial and planning advice that it needs to maximize its opportunities for success. To learn more about our services and how we can help, please reach out to us directly today. We offer initial meetings free of charge.