You’ve worked hard to build your business. Along the way, you’ve discovered the value of having a backup plan so you can meet any challenge that comes your way. It’s impossible to think of everything. But it’s important to be prepared for the unexpected. For example:

What would happen to your business if something happened to you, your business partner or a key employee?

At the very least, this situation could lead to uncertainty about the future of your business. You might expect to see the bank tighten up your credit and some of your customers could leave. In the event you’ve lost a business partner, you could find yourself in an unexpected new partnership with an heir who is not suited for the role.

Having an effective transition plan in place would help avoid this situation. It would lay out an orderly process for transferring ownership and staying in business. Now is the time to develop the details of this plan. That way no one has to make difficult, time-pressured decisions in an attempt to maintain the business after the sudden death of a key person.

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Depending on the circumstances, your transition plan would include:

• A succession plan with identified successors
• In the case of a partnership, a valuation process
• Most importantly, a buy-sell agreement

One key element of a successful transition plan is life insurance. It provides an important safety net during the stressful time surrounding the loss of a key person. It can replace lost revenue that a key employee would have generated, and it will also give you time to recruit and train the right person.

If you’ve lost your business partner, life insurance can provide the funds to buy out his or her portion of the business. For most surviving owners, this is generally the preferred option for funding the buy-sell agreement.

Other options include liquidating the business and selling to a third party, keeping heirs in the business, taking on an outsider who buys the deceased’s business interest or selling to heirs. However, each of these involves a degree of risk – can an heir or outside buyer successfully integrate into the business? If the business is liquidated, will its full market value be realized?

Life insurance gives you, your business partner or your family the funds needed to make pressure-free decisions about the future of the business and everything you’ve worked hard to achieve.

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For more information on Business Estate Planning, talk to your agent.