As with any business, trucking companies need to ensure they have a proper plan in place to handle the inevitable exit of key managers and stakeholders. For some companies there are no acceptable candidates to pass the business onto or the owner has no intention to do so and the operation naturally closes down. There are many other trucking companies we speak to, however, where there is full intention to pass the business on but no formal planning has been done to ensure the transition is properly executed.
A unique aspect of the trucking industry is the fact that many companies are family owned and operated and we often see third and fourth generations of a family involved in the operations. Surviving such a transition can be difficult and many trucking companies unfortunately do not make it past the first generation of ownership.
Almost all business owners are vital to a company’s success and in most instances if something were to happen to the owner there would be devastating effects on their family, their employees and their legacy. It is therefore critical for management and owners to review all the risks associated with a business and thoroughly plan for the future.
When considering succession planning there are many individuals which should cohesively be consulted including you accountant, financial advisor, lawyer, and also very importantly, your insurance broker. Although sometimes over looked there are a lot of solutions an insurance broker can provide when it comes to ensuring your business is passed off successfully including life insurance, disability coverage, critical illness protection, key man insurance and umbrella policies.
It is important to consider the following when thinking about how as an owner you affect the future of your business:
- What will your income needs be at retirement?
- Will you need to financially assist those who will take ownership to carry out the purchase?
What if you were to die?
- Will ownership of the business be retained by your estate? Liquidated? Given or sold to your family or a third party?
- Are you familiar with tax consequences which will arise in the event of your death?
- Will there be a need to eliminate debt in the event of your death?
What if you were to become sick or disabled?
- What will your income needs be if you are disabled?
- Will your income come from the business?
- If there is a shortfall do you have an insurance policy to protect you?
- If you plan to retain ownership of the business or transfer ownership to a family member, can the business support both parties taking into account your absence?
For business owners it is never too early to begin contingency and succession planning. Regardless of your planned timeline for handing off or selling your business, the proper insurance coverage can help minimize your risk and ensure everyone involved is protected. When purchasing any insurance it is important to work with a reputable broker. For over 25 years National Truck League has been providing industry leading coverage and peace of mind to truckers across Canada. We are always pleased to review available coverage options with our clients based on their changing needs to help them ensure they have adequate protection for themselves, their family and their business