It has been a long struggle, but you are finally on your way.
After years of effort, putting the fledgling business you founded before you and often your family, with low and sometimes no pay, and none of the benefits you may have received from an outside job, it is all coming together.
Often with just the backing of family and friends, you have built your product, you have attracted some clients, you are producing some revenue, and now investors with large cheque books can see why they should back you and your business.
Obviously the value of the company and your shareholding has increased, and hopefully now there is more money to pay an increased income, but are there other steps you can take to look after yourself and your family, and which may also benefit your business and the investors’ investment, and if so, there are reasons other than direct financial reasons why you should take these steps?
Some additional financial steps to protect you, and the investors.
1. Succession planning.
What will happen to your shares in the unfortunate circumstances you die?
Have you made or updated a will to cover the shares in your company?
Further, what will happen to your shares if you co-founded your company? You and your co-founder can take out insurance so that on the death of either of you, the money is available to allow the survivor to buy the deceased’s shares, with an option for the survivor to buy the shares of the deceased if they want to, and an option for the heirs of the deceased to require the deceased’s shares to be purchased. This way the shares can stay with the surviving founder and the money is available to allow them to be bought.
2. Keyman insurance.
This is something the investors, company employees or possibly other shareholders in your company may benefit from.
It is an insurance policy which protects your company from the loss of a key individual, namely yourself. If you were to die or to be too ill to work, he company will be insured against the loss it would suffer as a result. In essence, it give your stakeholders confidence that your company can survive and thrive even if it loses a key individual.
3. Income protection.
Also called permanent health insurance, this will pay you a regular income if you cannot work because you are sick or disabled. It can continue until you return to paid work or until you retire.
4. Health insurance.
Also called private medical insurance, this is an insurance policy which will pay or contribute to the cost of private healthcare.
Some non-financial reasons for introducing these.
1. Your well-being and commitment
You are the driving force behind your company and it stands to reason that if you are healthy and motivated healthy and motivated you are even more likely to lead the company to success. Providing benefits can help reduce your stress and ensure you remain fully committed to the business.
2. Long-Term Success
Founders who receive benefits are more likely to stay with their companies for the long haul. This stability at the top can significantly impact the company’s overall success. Retaining the founder ensures continuity in the company’s vision and strategy, which is often vital for maintaining a competitive edge. It also provides a sense of security to stakeholders, investors, and employees, as they see a steady and consistent hand guiding the ship.
3. Attraction of Top Talent
Competing for top talent can be fierce. Founders are acutely aware of the importance of recruiting the best professionals to help their companies grow. Offering benefits to the founder can serve as a powerful recruitment tool. Potential employees are more likely to be drawn to companies where founders are treated well, as it signifies a company that values its leadership and is willing to invest in its team.
4. Ethical and Legal Considerations
From an ethical standpoint, recognizing the efforts of the founder is simply the right thing to do, and failure to provide benefits to founders could lead to legal complications and tarnish a company’s reputation. Furthermore, it’s essential for companies to be seen as responsible and ethical corporate citizens in an increasingly scrutinized business environment.
Providing employee benefits to a company’s founder is not just a business strategy; it is an ethical imperative. Recognizing the founder’s efforts and contributions through benefits ensures their well-being, commitment, and continued dedication to the company. It also fosters a culture of trust and fairness within the organization, while contributing to long-term success and making the company more attractive to top talent. Acknowledging the founder’s role through benefits is a practice that should be embraced and upheld, for the benefit of all stakeholders and the continued growth of the company.