Covid has finally caught up with me this month. It has taken me fully away from work for one week, and rescheduling any face-to-face meetings for a second week. While I am lucky that I can take much of my work online and can easily reschedule, it has still been disruptive.
For many businesses the disruption of Covid and staff absences is more severe. Pressure is put on the remaining staff to ensure that the level of customer service does not slip. Worst case scenario is losing out on immediate sales, damage to your business reputation, or long term business harm.
One thing to consider is who is the key person (or people) that are critical to business operations? This could be the business owner, or a key staff member. What happens when this person is not available, either through illness, injury, or worse?
Do you have systems and processes documented so that anyone can pick up the tasks of that person? Do you have a system where at least two people know how to do every job in the business? Is important business information accessible, or is it only on one person’s computer? Are you still able to pay your suppliers on time?
If a business owes all or a large proportion of income directly to one or two people, key person insurance can be a way to reduce the impact of that person passing away or being incapacitated – this of it as life insurance in a business context.
Key person risk should be managed like any other risk of being in business. Identification of the risk is the first step, then identification and implementation of strategies to either reduce the risk, or mitigate the effect. Simply having the conversation with your team can be a great starting point.
Ann Gibbard is a Business Success Partner with Oxygen8 Consulting. For help with growing your business, improving its profitability, preparing your business for sale, or for a free Business Diagnostic, contact Ann at ann@oxygen8.co.nz or 021 682 014.