One of the primary reasons people form partnerships and corporations is to benefit from the combined talents of multiple business owners. Once they form a business entity, it will only be successful if the major players all make important contributions to running the business.
Most business owners rarely take the time to stop and analyze the impact to their business that the absence of a major player would cause. Just imagine if suddenly one of the key players in the business could no longer come to work because of a work-ending disability.
When this happens it becomes apparent how critical each individuals contribution is on an on-going basis. This is particularly true in small businesses where any prolonged absence of a principal is felt. When the absence of a key player is a result of a disability, a whole host of issues surface:
–If it is a short-term disability of a few days or weeks, somehow the workload gets distributed among the well employees; in some cases a temp can be brought in.
–If it is a long term or permanent disability, it can open a “Pandoras box” of complicated problems for the remaining owners.
In addition to the legal issues that need to be dealt with, a long-term disability can raise moral issues among fellow business partners. For instance, individuals who work closely together in a small business establish not only a business relationship, but also many times, a personal one that may involve other family members, such as spouses. In a tightly knit group of business partners, discussions that take place with key members absent may cause a rift in the relationship.
There are a number of other conflicts that also need to be addressed (see sidebar).
What Are The Chances of This Happening?
With all the key players busy running the business, chances are this is a minor area of concern. Many times, they feel this is the sort of thing you read about in the newspaper. These owners usually have the attitude that, “It happens, but chances are good that it will not happen to anyone in our business.”
Actually, the odds are noteworthy. Consider these statistics for a multi-owner business. The chances of at least one owner becoming disabled for 90 days or more before age 65 are as follows:
–With two owners, both age 35, there is a 34% chance that one will become disabled.
–With three owners, all age 35, there is a 47% chance that one will become disabled.
–Of all 45-year-olds disabled for at least one year, after five more years:
–19.9% will have died.
–57.5% will still be disabled.