No business can ignore the importance of a perpetuation plan, insurance companies included. A perpetuation plan ensures the future of your company, making certain that it can continue to thrive and be successful once you are no longer a part of it. However, while perpetuation planning is crucial, there are so many insurance providers that aren’t taking it seriously. Below, we reveal the different reasons why insurance companies are resistant to perpetuation planning.
Perpetuation planning is overwhelming
A lot of business owners do not put a perpetuation plan together because, quite simply, they do not know where to start. An alarming number of perpetuation plans fail, and this, coupled with the fact that a lot of insurance firms do not have a plan in place at all, indicates that there is a clear disconnection. Most business owners put perpetuation planning to the bottom of the to-do list and it stays there because they just don’t know how to go about it and they feel it will take far too much effort.
They don’t believe they need a perpetuation plan
A lot of insurance providers simply believe they do not need a formal perpetuation plan. The reason for this is typically because they are planning to sell the company on once they are no longer interested. However, a perpetuation plan is actually critical when it comes to the sale of a business. Perpetuation planning details how the company will cope when you are no longer there, and surely this is what happens during a sale?
They aren’t planning to leave the company any time soon
Many business owners don’t see perpetuation planning as a vital matter, as they aren’t planning to leave the company in the near future. But, who knows what could happen? You may have an urgent family matter, you may be offered a deal you can’t refuse, or an injury could force you into early retirement.
Perpetuation planning is for big businesses
There are many small firms in the insurance industry, and a lot of these believe that they are just not big enough for perpetuation planning. They feel they don’t have the time or the people to put together a plan, and they deem themselves too small for it to be necessary. This could not be further from the truth.
They’ve chosen a family member as a successor
Family-run insurance firms tend to overlook perpetuation planning because they have already identified a family member the business is going to be passed on to. For example, a father may have already decided that, no matter what happens, his business is going to go to his son. But, is your son capable? And, a succession plan incorporates a lot more than simply the identification of a successor.
They will know the correct person when they see them
Finally, there are a lot of insurance providers that believe there is no need for a systematic approach, and that they will know the right person when they see them. Again, this is highly ill advised.