It’s hard work starting a business from scratch. Sometimes you feel that you’re taking two steps forwards before something knocks you three steps back again. 

Whether it’s staff, business rates, global pandemics, you name it… there will always be something trying to get in your way.

What makes you a successful business owner is down to how you deal with it. You get back up, brush yourself off and go again. Because you have to, there is no other way! If it was easy everyone would do it, right?

Imagine, however, that you wake up to a call one morning from your business partner’s spouse or partner informing you that they had died? It’s not inconceivable, everyone dies sometime! You’d be in shock and, no doubt, go through a period of grief. But you’d still have a business to run, one that has to function no matter what is thrown in front of you.

However, when the dust settles, you realise that you are now be in business with your business partner’s spouse. They now own x% of the shares and have x% of the dividends. Although they won’t automatically be a director of your business, and therefore have any say in the day to day management, they will be a stakeholder. As a result, they have an interest in any future sale or offer. If you really don’t get on with them, they might be able to sell their shares to your local competition.

I love both of my business partners’ spouses, I really do. But I still wouldn’t want to go into business with either of them. They have their own careers and could never care about Co-Navigate the way I do.

I’m painting a doomsday scenario here, I know. But it does happen. The solution is so simple as well. A life insurance policy is put in place for each shareholder for the value of the shares, and ensures there is enough money paid to the surviving shareholder(s) via a business trust. A legal cross-option agreement then allows either the surviving shareholder or the deceased shareholder’s representatives to trigger an automatic swap. You get full control of your business back and the widow gets the benefit of a lump sum representing the value of their shareholding. That’s a win-win.

Don’t fall into the business ownership trap! To speak to us about protecting your business please contact enquiries@co-navigate.co.uk, call 0191 228 6130 or fill in our form.

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