About Veronia Reed

Veronia Reed is a keyperson and life insurance specialist. By focusing upon this specialist niche, you can rest assured that you're receiving quality advice that is current and appropriate for your needs.

How to Find the Right Interim Manager for Your SME

Businesses of all sizes have times when an injection of expertise from an interim manager (or even an interim team) with heavyweight business experience would be useful.  If you can’t afford, or don’t need a permanent employee one option worth considering seriously is hiring an interim manager.  The flexibility of bringing in a manager with depth of experience for a short period can generate invaluable results.  Pick wisely and you find someone with the skills to analyse your business needs and get up and running quickly.

Getting ready for an interim appointment

  1. Identify providers

Look for a number of interim providers, ask for recommendations and speak to interims you already admire – either in your sector or elsewhere.

  1. Establish relationships

Establish and build relationships with good quality interim providers and get a feel for what they can offer. The provider needs to understand your business. Once they do you will have the confidence they can find you the interim you need.

  1. Get an emergency staffing policy in place

Ensure you have a current company policy and procedure for emergency staffing. It is always good to have a contingency plan. You want to be able to minimise damage if you lose a key employee.

  1. Consider insurance

Does your company have sufficient insurance, for example key-man insurance? If a key person leaves or is ill such insurance can cover the costs of hiring an interim manager. So it might be worth your while to get this insurance in place.

Now you’ve identified a need get started

  1. Present a concise brief to your chosen interim management provider. Clear and direct face-to-face communication combined with email will get the best results. This will give the agency a fair chance of understanding the brief and mean they can identify appropriate, high quality candidates who genuinely can deliver what you need. (You don’t want someone just because the CV superficially ticks the boxes).
  1. Write a clear job description and include very specific skills and characteristics you need your Interim to have. You want the person to fit the company culture and the team.
  1. Discuss the milestones and deadlines for the hiring process with your provider so your expectations are realistic.
  1. Take care deciding the assignment length. For example, is it for two months or nine to 12 months?
  1. Budget carefully. If you drive the daily rate down, you’re unlikely to get the quality people or experience you need.
  1. Plan how you will integrate the interim into the team. Identify someone for the interim manager to report to who can establish regular times to liaise so there is supportive and constructive communication. You also need a system to ensure that your interim manager is achieving the quality and timeliness of deliverables need.

An interim manager with up-to-date expertise and good communication skills can help you navigate a stormy period, or introduce changes more smoothly and rapidly than your existing team could do alone.

Before your interim manager leaves, engage in a formal process for transfer of knowledge. Perhaps the person can run some training sessions before departing.  You want to make the most of your investment and benefit both short and long-term.

Get this right and hiring an interim manager could be the best business decision you make this year!

Can Your Business Survive Losing One of Its Key People

As much as you try to share skills, knowledge and information in your company, you probably have some people who are key to your business’ success.

key person insurance

It might be a Director or the CEO, whose vision made it a success in the first place. It might be your star salesperson, or someone in your IT area who knows the system backwards. It could even be someone who doesn’t create any revenue but does a fantastic job of boosting your company’s reputation or perhaps running your admin and back office systems.

 

Now, what would happen if you suddenly lost one of those key people?

 

And if you think it would never happen because they love your business so much, think again. Sure they may not resign. But they might decide to start a family and want to leave the workforce. Or what if they suffered a major illness or injury, or even passed away?

 

In addition to the obvious issue of lost productivity and their contribution to the business, you also have to spend time (and money) to recruit and train a replacement. And losing such a key person in your company could even affect your reputation and credit standing.

 

Could your business survive until you find someone who can fill their shoes?

 

Key Person Insurance can help you get back on your feet

 

Key Person Insurance can give you the financial support you need while you’re getting back on your feet. It can offset both your costs (e.g. hiring temporary help or recruiting and training a replacement) and your losses (e.g. not being able to do as much business until they finish their training).

 

It can also help with:

 

  • business succession planning
  • protecting your company’s equity value
  • agreed funding to purchase the equity
  • continuity of equity value for the surviving spouse
  • funding re-payments of any capital loans or personal guarantees
  • meeting requirements for bank business loans
  • salary packaging benefits (depending on the person’s taxation affairs).

And you can take out a policy (which is usually tax-deductible) on anyone you feel is a key person in your company.

 

How much should I insure them for?

 

The amount you specify will depend on the size of your company and the person you’re insuring.

The amount can be calculated in a few ways, including:

 

  • the ‘replacement cost method’, which is based on the cost is to replace the key person
  • the ‘contributions to earnings method’, which is based on the percentage of their earnings towards your company’s revenue
  • the ‘multiples of income method’, where their current salary is multiplied to determine their value.

 

 

Protecting your partners (and their partners) with a Buy/Sell agreement

 

What if the key person happens to be your partner in the company? Yes, the Key Person Insurance may well cover the finances involved in buying your partner’s shares from their family. But do you really want to be negotiating a deal at such an emotionally trying time?

 

Having a Buy/Sell Agreement in place can save everyone from a lot of anguish. It’s a legally binding agreement that determines what will happen to each stakeholder’s shares if they suffer a major illness or injury, or pass away.

 

It has two parts:

 

  • The Disposal Mechanism (also known as a Business Will), which states what happens if a partner leaves the business due to death or disability. It usually contains a valuation method.
  • The Funding Mechanism, which funds the Buy/Sell Agreement. This is where you would find the details of the Key Person Insurance policy taken out for each partner.

 

How do I arrange Key Person Insurance?

 

Before you take out Key Person Insurance you should first speak with your business advisor about the overall approach and then get into the details with an insurance broker. You need to make sure you get the cover you need without paying for the cover you don’t need. We can guide you in this area.

 

After all, it may well be the key to your business’ survival.

Understanding Risk Management for Small Business

Operating a successful small business involves decisions in several areas , one such area is risk. Risk, is the exposure to danger, harm, or loss. For businesses the term usually applies to the risk of financial loss.

Whether you have just starting your business, or you have been trading for a while, protecting the business you worked so hard to build is a priority. Unfortunately, it’s a step that many entrepreneurs neglect in the rush of launching a startup and operating day-to-day.

 

Here are several steps you can take now to protect your small business.

 

Choose the right form of business

Operating as a sole proprietorship — the default business structure for a one-person business — may be easy, but it’s not necessarily the best choice to protect your business. For one thing, the sole proprietorship structure doesn’t protect your personal assets. That means if a customer decides to sue you or a vendor demands payment that your business can’t afford, your savings, home and other assets could be fair game.

 

Hire a lawyer

You may not need to use a lawyer that often, but when you need one, you need one fast. Ask other entrepreneurs, business colleagues and friends for recommendations to lawyers who are familiar with small business issues. Take the time to compare lawyers by scheduling an interview with each before you hire them. Discuss payment options — most lawyers have different payment options for smallest businesses.

 

Find an accountant

Even if you plan on doing the bookkeeping yourself, a good accountant is worth the price. Who has time to keep up to date on tax law changes? You sure don’t — but accountants do. Not only can they save you money on your taxes, they can also provide valuable advice on how to structure your business, the best way to finance expansion, and how much to pay yourself.

 

For suppliers and contractors: Be smart about new customers

Before taking on a major new customer, conduct a credit check. This helps protect you against unpaid invoices. Never do business without a written contract — no matter how confident you are in the customer’s word. If something goes wrong, a contract may be the only thing that ensures you get paid for your hard work.

 

Buy business insurance

Most businesses need general liability insurance, and if you provide advice or professional services to customers, you may also need professional liability insurance, also known as E&O (errors and omissions) coverage. If you have employees you are required to have workers’ compensation insurance. Other insurance products to consider include key man insurance on your life and the life of other key employees, business interruption insurance (which protects your income if your business has to shut down due to a disaster), product liability, and cyber-insurance.

 

Protect your employees and customers

Disaster can strike any time, so it’s important to have a disaster plan for what you will do in case of emergency to protect your business. Create a plan and assign responsibilities for how to get employees and customers out of the building safely, what to do if a disaster keeps you and employees from getting to your business, and how you will keep running even if you can’t get to your physical location. Learn more about creating an emergency disaster plan.

 

Protect your business data

Back up your company data and documents with cloud storage so you can access files anywhere. When your information is stored in the cloud, you don’t have to worry about a crashed hard drive, or how a fire on your premises could wipe out precious data. To protect your business from cyber-crime and hackers, install appropriate firewalls and, more importantly, train your employees in cyber security measures, such as creating strong passwords.

Four things Small to Medium Business Owners Should Consider About Insurance

Australia’s more than two million small businesses make an enormous contribution to our communities and are the backbone of our economy.

Here are four steps that every small business owner should consider when thinking about their insurance. 

Key person insurance

Key Person Insurance Cover

 

1. Protect your most important assets

 

Your most important assets are your family, your employees and your ability to earn an income. Small business owners have a lot on their plate, juggling many roles within a company. With so much going on, it is understandable insurance won’t always be high on a long list of priorities.

However, ABS statistics show 5.3% of Australians experience at least one work-related injury or illness within a year. This is in addition to accidents taking place outside the workplace and non-work related illnesses. Any of these events could mean time out of the workforce and sudden loss of income, so it’s worth thinking about how your business would manage in this type of situation.

Additionally, offering life insurance to employees can act as a compelling tool for attracting and retaining top talent, and could be a highly competitive benefit!

 

2. Understanding different types of cover

 

It’s important to understand the different types of cover available for both you and your employees. For instance, income protection, trauma and TPD can protect your income by providing a regular lump sum if you become sick or injured.

Life insurance provides a lump sum benefit for your dependants should you pass away or become terminally ill. Key person insurance (also called key man insurance) covers against lost revenue and assets if you or a key person were to pass away, or became unable to work due to disability or illness.

Imagine if a business is owned by two business partners. One of those partners becomes sick and dies. What happens to the business? His/ her spouse will have a right to take over the share of the business. With Key person insurance, the surviving business partner can buy out the remaining share of the business and continue operations, allowing the business to still continue forward.

 

3. What’s important to you?

 

When considering your options think about what matters to you most and use that as a starting point. In our research business owners emphasised the importance of safeguarding their lifestyle, family and business.

 

4. Ask around

 

Seeking professional advice is always a good idea when reviewing your insurance. Our research shows small business owners consult a variety of sources for financial information. These include independent financial advisers, accountants or lawyers, brokers, internet forums, banks, friends and family. The research also showed that SMEs found using a broker saved time and gave them peace of mind.

 

 

5 tips on holding Life Insurance through your SMSF

 

 

Holding your Life Insurance through your Self-Managed Super Fund can be an effective method to secure the future of yourself and your loved ones. The following tips may help:

 

1. Considering Life Insurance within your SMSF is actually a requirement by the ATO
Findings from the government’s Cooper review revealed that only 13% of self-managed super funds actually held any form of Life insurance. In response to this underinsurance gap the ATO made it a requirement for all trustees to at least consider life insurance in their strategy document or meeting minutes. This does not mean that trustees are required by law to hold life insurance within their SMSF, it does however mean to be compliant with the ATO, it must be documented that consideration was given to life insurance within the fund.

 

How we can help: We can provide you with the right information to pass onto your SMSF accountant in order to ensure your SMSF remains compliant in this area.

 

2. Cash Flow Benefits
Since your SMSF owns the policy, it will fund the premiums. This can free up your cash flow, especially for times when money is tight or when you have more pressing financial priorities. It can be beneficial however to implement a contributions plan in order to avoid the eroding effect insurance premiums can have on your retirement savings.

 

How we can help: We can assist you in either transferring your current policy into your SMSF or advise on an alternative policy to undertake should this be appropriate for your situation.

 

3. Tax Efficiency
Tax savings can be achieved by funding your insurance premiums via pre-tax dollars through salary sacrifice and personal tax-deductible super contribution strategies. This effect is magnified for those in the higher tax brackets in reducing taxable income.

 

How we can help: We can provide you with specialist advice as to a contribution plan to avoid retirement savings erosion and to reduce taxable income.

 

4. Protect your assets within your SMSF
Life insurance within your SMSF can help avoid the sale of valuable assets such as property should something happen to a member. Not having the right insurance in place could have a major effect on the liquidity of the SMSF, as the death or TPD of a member is unpredictable and the consequences could be damaging to the other members.

 

How we can help: we can provide you with a review of your current cover and make recommendations based on your needs to cover any risk in this area.

 

5. Protecting Members
The underlying motive behind the requirement for members to consider Life Insurance in their SMSF’s is to prevent members from being underinsured. Putting in place the right amount of cover for your situation can help protect yourself and your loved ones from financial strain should something tragic happen.

 

How we can help: If you don’t know how much cover you need let us provide you with recommendations for appropriate levels of cover so that your financial future cannot be hindered by a devastating injury or illness.

 

 

The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out.

What is a buy sell agreement and how will it help my business?

 

Buy/sell agreements help to ensure a smooth transition of business ownership to remaining owners in the event that one business owner dies or is unable to work due to illness or disablement. They help to ensure remaining owners retain control of the business and the departing owner receives fair value for the sale of his or her share of the business.

 

Buy/sell agreements are often funded with insurance policies. There are various options for owning insurance policies and these should be discussed with a financial adviser and/or tax adviser.

 

To implement a buy/sell agreement, business owners should enter into a legally binding agreement setting out the details of the arrangement. This agreement should cover issues such as who is to receive the departing owner’s share of the business, the trigger events that will result in the transfer (eg death, disablement), the formula for determining the value of the business and how the transfer will be funded (eg insurance or other monies).

 

The tax implications of paying premiums and claiming proceeds will depend on how the insurance policies are owned.

 

Other things you should know
• Business insurance should be reviewed regularly, to ensure it continues to meet the changing needs of a business.
• Insurance contracts vary. It is important to check the terms of any contract to ensure the cover meets the needs of the business and the owner.

 

 

General Advice Warning: The information provided in this document, including any tax information is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read any relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.

Australia’s preference: Insure car but not Income?

 

“83% of Australian’s insure their cars but only 28% insure their income.” *lifewise.org.au
Which is the most important asset to you?

 

It seems far from ideal that in the tragic event of a car accident that your car is more protected than yourself.
Take for example a 35 year old man, Joe. He earns $60,000 per annum and has a car worth $20,000. Over the next 20 years, if Joe’s salary stays at $60,000, he will earn approximately $1.2 million dollars over that period, not taking into account any pay rises.

 

Does it come as a surprise that Joe insures his car worth $20,000 to him, yet he does not insure his ability to earn which over the next 20 years is worth $1.2 million to him? It should. It is also surprising that Joe is not alone.

 

An unexpected illness, broken leg on the sports field or a severe back injury could put you out of action for months. This leaves a number of uninsured Australian’s struggling to meet the everyday costs of food, rent, and utilities, not to mention if you have a mortgage, kids, or personal debt. What would you do without an income?
Income Protection costs a fraction of your income yet can provide you with a replacement monthly income stream should you suffer an injury or illness rendering you unable to work. It can provide you with the peace of mind that an injury or illness won’t stop you from receiving a smooth monthly income.

 

Talk to one of our advisers today about putting in place a plan to cater for your personal needs. Take control of your income, don’t leave it up to chance.

 

The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out.

Reaching 100 years old: some tips from Sweden

The key ingredients are simple according to Researchers at the University of Gothenburg, Sweden. “Refrain from smoking, maintain healthy cholesterol levels and confine themselves to four cups of coffee a day” says Dr Lars Wilhelmsen.

 

The study analysed data on 855 Swedish men born in 1913, including 10 who are over the age of 100. The scientists were able to identify factors that promoted longevity of life, particularly after the age of 55.

 

The study also showed that it also helps to own a house by the age of 50 — indicating a high standard of living — display a good level of middle-age fitness and to have a mother who lived a long time.

 

The research found that 27 per cent of the study participants survived to the age of 80 and 13 per cent to 90.

 

Of all the deaths occurring after the age of 80, 42 per cent were attributed to heart disease, 20 per cent to infection, 8 per cent to stroke, eight per cent to cancer, six per cent to pneumonia, and 16 per cent to other causes.

 

You can find the complete findings in the Scandinavian Cardiovascular Journal.

Five Life Insurance mistakes and how to easily avoid falling victim

Recent Forbes magazine article lists five major ways in which owners of Life Insurance policies have been caught out and some simple ways in which we can avoid these pitfalls. The examples given in the article are mostly taken from the United States however, the principles hold similar here in Australia. Be sure to look out for the following:

 

Rate Increases – Once you implement a Life policy it would be imprudent to just stow it away in the drawer and forget about it. Have your adviser update you annually as premiums increase so that you are in control.

 

Group Insurance – While sometimes Group Cover can be more effectively priced, on many occasions it can be quite the opposite. Get yourself a comparison. Furthermore, be aware of the conditions. An employer implemented policy could prove to be null and void once employment has ceased, leaving you uncovered and your financial security vulnerable.

 

Beneficiary Designations – Make certain your beneficiary nominations are up to date as your situation changes. Events such as marriage, the birth of children, or even divorce should prompt you to make the right amendments to your policy.

 

Estate Tax – Countless options arise on ways of minimising tax for your estate upon payments of Life Insurance policies. Speak to your adviser on strategies to ensure tax efficiency.

 

Ownership Structure – Do you own your own business? Are you a sole trader? If the answer is yes, take advantage of the many tax efficiencies available to you. Find out the best way to own your policy whether that be through Individual ownership, Business ownbership, or Superannuation ownership. Speak to a risk adviser for the option most catered to your situation.

 

Implementing a Life Insurance Policy is a powerful step towards securing the financial future of your loved ones, but maintaining them is just as important. Another reason to have a risk adviser keep you up to date at least on an annual basis.

 

http://www.forbes.com/sites/deborahljacobs/2014/10/20/five-life-insurance-mistakes-that-can-haunt-you/

Group life insurance vs Individual life insurance

It may be the case that you have existing life insurance or income protection within your employment arrangement, perhaps within your superannuation fund.
 
Recent research by Dexx&r has shown that with rises in ‘group’ type policies in the past few years, it may be the case that your options are now available to ‘compare the pair’ through your own individual policy.
 
Money Management magazine explains this research further: 
http://www.moneymanagement.com.au/news/insurance/2014/individual-risk-products-now-trump-group