Despite risk mitigation increasingly keeping business owners up at night, an alarming number do not have a current will, a business advisory firm has found.
HLB Mann Judd’s Georgina Ridhalgh said that business owners have become increasingly nervous about their ability to protect themselves and their family from risk, with the firm’s SME Research Report 2017/18 finding the issue has rapidly overtaken other traditional concerns among business owners, including cash flow.
“The SME Research Report identified that the number two business risk for SMEs was protecting the business and family assets,” said Ms Ridhalgh.
“Business owners want to protect what they have worked so hard to achieve.”
She said while many of the business owners surveyed are working to de-risk the business itself, only half (54 per cent) have a will in place, and less than a third (30 per cent) have considered estate planning – including power of attorney, enduring guardianship and appointing superannuation beneficiaries.
While the lack of a will can be a complex process for a grieving family to navigate, it also throws in questions around business continuity and ownership, particularly where non-related directors co-run the business together.
Ms Ridhalgh noted that, just like with tax affairs, everything relating to estate planning needs to be properly documented to ensure the owner’s intentions are adhered to after death.
To this effect, she suggested that a business plan be expanded into a business life plan, to include aspects that directly affect the business and the owner’s overall wealth – such as marriage, divorce, children and periods of ill health.
This plan, said Ms Ridhalgh, should include a glossary of relevant documentation, including the business plan as well as the owner’s will, to make future updates much more straightforward as circumstances change.
Another startling finding of HLB Mann Judd’s report is that four out of five businesses don’t have a business plan in place.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.