Running a business takes vision, resilience, and commitment. Yet even the most dedicated business owner cannot control every risk that may threaten the future of their company. Business assurance is one of the most important tools to ensure continuity, protect shareholders, and safeguard families when unexpected events occur. Without it, businesses often face financial and legal complications that can quickly unravel years of hard work.

At Candid 20 Twenty, we believe in simplifying complex financial matters so business owners can plan with clarity and confidence. After attending a business assurance workshop where Martin Swanepoel and Hary Joffe gave some tips and points on business protection. Here are some of the most important aspects of business assurance and why every South African business owner should have a plan in place.

The Importance of a Buy and Sell Agreement

In businesses with more than one shareholder, a buy and sell agreement is essential. This is a formal document where shareholders agree that, in the event of one partner’s death, the surviving shareholders will buy the deceased’s shares based on their ownership percentage.

Without such an agreement, the deceased’s family may suddenly be placed in a position where they must decide what to do with the shares. This can cause uncertainty and conflict, not only for the family but also for employees and the stability of the business.

The funding for a buy and sell agreement typically comes from life insurance policies. To make sure this works as intended, the valuation of the business must be updated regularly — ideally once a year. Some agreements allow for up to 13 months, but even this can create complications if the valuation is outdated and the funding falls short. Correct structuring of the life policies is also critical to avoid unintended tax consequences in the deceased estate.

Understanding Surety and Contingent Liability Cover

Many business owners sign surety when securing a loan from a bank or financial institution. What is often overlooked is that this financial commitment does not end at death. If a shareholder passes away, the estate may still be held liable for the outstanding debt.

A practical solution is contingent liability cover, a life policy designed to settle the business debt in the event of the signatory’s passing. This type of cover pays out to the company, allowing the liability to be cleared. However, it is vital to ensure that the policy proceeds are used correctly. Clear instructions or binding agreements should be in place to prevent the funds from being diverted elsewhere, which could leave the estate exposed to the debt.

Protecting Key Individuals in the Business

Another cornerstone of business assurance is key person insurance. Every business has certain individuals whose expertise, leadership, or client relationships are crucial to its success. Losing a key person can create both immediate financial strain and long-term operational challenges.

Key person insurance provides the business with a payout, often calculated at four to seven times the individual’s annual salary. This capital can then be used to maintain cash flow, recruit a replacement, and cover training or upskilling costs. By planning for this risk, businesses can soften the financial blow of losing a vital team member and maintain continuity during a difficult time.

Business Assurance in Family-Owned Businesses

Family businesses make up a significant portion of South Africa’s economy, and they often carry unique risks. The loss of a family member who is also a shareholder can create tension between personal and business dynamics. Having experienced this first-hand, I have seen how business assurance strategies such as buy and sell agreements, contingent liability cover, and key person insurance can reduce conflict and provide much-needed clarity for both the family and the business.

Building a Continuity Plan that Works

Business assurance is not only about having the right policies in place. It is about creating a clear, practical business continuity plan that outlines what will happen in the event of death, disability, or the loss of a key shareholder. It involves regular valuations, correctly structured agreements, and ongoing support to make sure the strategies remain relevant as the business grows.

At Candid 20 Twenty, we assist with planning, executing, and supporting these solutions. We are with you every step of the way, simplifying the technical details and making sure you understand exactly how each strategy works for your business.

Candid 20 Twenty is passionate about helping South African business owners protect what they have built and prepare for the future. Business assurance is not just about policies and paperwork. It is about giving you peace of mind that your company, your family, and your legacy will be taken care of no matter what happens. Let’s have a candid conversation about creating the right continuity plan for your business.

Partnering with Candid 20 Twenty means choosing a team with decades of combined expertise in financial planning, risk management, and wealth protection. Led by Shirley, a CERTIFIED FINANCIAL PLANNER® and FIDUCIARY PRACTITIONER OF SOUTH AFRICA®, we bring over 25 years of dedication, insight, and award-winning service to every client relationship. Our approach is built on open, honest conversations that give you 20 Twenty vision for the road ahead. Whether you are building a new venture or safeguarding an established legacy, we are here to light the way.