One of the most challenging aspects of running a Pharmacy Business is to make sure all financial considerations are maximised, including;
- Working out the best way to extract profits year by year
- Ensuring minimum tax is paid
- Ensuring Pensions are optimised
- Planning for a future sale
- Making sure all bases are covered for future unexpected turns of events such as death
A business owner has a responsibility to put in place the best solutions to each and every requirement or problem. A very common mistake is to under-estimate how probable a future change actually is. The key to good planning is to assume that things might change or be different in the future and to make sure that the business has a plan in place to ensure it can cope with such changes. One of the key questions to always ask is: “What if I’m not here tomorrow?”.
We see businesses that are expanding, often with loans in place to support the development, that have no protection in place to pay the loan should circumstances change! At that point, the loan becomes fully repayable and a problem. Research from Legal and General shows that over 50% of businesses do not have protection in place against Business loans.
“The reality is there is often a knock-on effect to family members of the business owners if things should go wrong.”
In the old days, before PPI and bankers scandals, it was often mandatory that when a loan was agreed between a borrower and the bank – or any other type of lender – it had to be protected. Otherwise, you simply wouldn’t get the loan. This was sensible but, generally, no longer applies. The responsibility in today’s market is for the borrower to put the protection in place, voluntarily.
In the health industry, the value of prevention as a better means of dealing with problems is widely accepted.
Protecting a loan is a form of prevention. Just about anyone taking out a loan, to support a business need, assumes they can deal with the lending and the lender is likely to assume this as well – otherwise they wouldn’t agree to the loan.
When running a Pharmacy Business things change and every year there are copious examples of businesses getting into difficulty with loans, often this comes from unexpected events, such as the serious illness of the business principal or key person, or the death of such an individual. This can then lead to difficulties for the family of that individual who may well have to deal with the loan in some way. So many families around the UK are linked to the success and income generated from a business, even if they are not directly working in the business. They will lose the income being generated into the family from the business or will see the value of the business plummet. This can also have an effect if you’re in Business with somebody else, the Business partner will then have to deal with the loan and supplement any further costs. All or any of which could have been avoided – in full – if the loan had been protected.
There are some commercial risks you may struggle to insure, such as customers going elsewhere, however when it comes to illness, accident, loss of capacity and death, these are all things that can and should be insured.
It’s such a simple point. Business loans or liabilities may look like they present a risk just to the business but the reality is there is often a knock-on effect to family members of the business owners if things should go wrong.
An unprotected Business loan, should the business owner die or become seriously ill, can lead to a domino effect which causes the family members to struggle or suffer. By protecting the loan, a business owner can ensure that their family will inherit the full value of the asset or business. Not protecting a loan could lead to further complications for a family already navigating their way through a difficult emotional time.
Amongst all the time pressures of running the Business, dealing with suppliers, customers, staff, the books, the paperwork and so on, it can be easy to lose sight of any future risk or to put them to the bottom of a priority list.
However ensuring your loans and liabilities are cleared in the event of your death or serious illness really should be at the top of your list– as the effects of not doing this and something unexpected happening are too great to ignore.
If you need help and advice to ensure your Pharmacy business is fully protected from all outcomes then please call 02920 450 143 or email firstname.lastname@example.org. We’ll set you up with one of our no-obligation Discovery Meetings at our expense giving you the chance to speak with a member of our team.