Key people in any business, although not directly related to Business Succession planning, do play an important role in developing your business succession plans. As such, I would be remiss if I didn’t take some time to share some information on this topic. Actually the concept of a KEY PERSON OR KEY PEOPLE came from the previous article on the ONE WAY BUY SELL. In that report we discussed the idea that a Key Person within the business may wish to BUY OUT the business upon a triggering event. A Key Person helps provide growth to the business, stability, increases the chances of securing business loans for expansion and in many instances increases the value of a business.
A KEY PERSON is an individual who provides special skills and/or makes significant contributions to the business. Usually executives, managers, or even heads of various departments are considered Key People. In many past reports, we described what would happen to a business upon certain triggering events TO THE OWNER(S) of the business. However, stop and think for a moment what would happen to one’s business if your KEY PERSON were not around due to a death, disability or simply left your business to move to a competitor. Such events due happen and fortunately there are ways to protect your business from the loss of a Key Employee.
It goes without saying that special FRINGE BENEFIT PACKAGES can and should be put into place. However, please be aware of certain discriminatory rules that may apply to your business. Later, when we discuss FUNDING of your BUY-SELL, we will discuss other ways to protect your business from the loss of a KEY PERSON.