Having identified the risks further work needs to be done to analyse and evaluate the risks
. The risk management process is about identifying risks so they can be managed. The process for management involves a cost benefit analysis. What are the consequences of losing an asset or all assets compared to the cost of putting a strategy in place to reduce or nullify that happening.
There are some simple and basic strategies that can reduce some risks for little cost.
These are:
1. Ensure only the people who have to be directors of your company are appointed as directors. Do not just automatically appoint your spouse. If you have an existing company consider removing your spouse as a director and reviewing your affairs with a goal of ensuring that assets held in his/her name are not exposed.
2. Where feasible keep ownership of assets separate from the business operations. If the business fails the assets are not at risk. Your business premises have the potential to be a significant asset and should not be in the same entity as the business.
3. Family Trusts are still useful vehicles for ownership of assets as a method of protection. They are easily set up by your solicitor or purchased off the shelf form your accountant. Use one to keep your personal assets separate as well as your business assets.
4. Review annually all directors guarantees signed to ensure they are still required. Don't just sign them for creditors as a matter of course. Even if a particular supplier is the only one you wish to or are able to deal with, don't sign the guarantee and see if they will still open the account?
5. Review your assets annually. Have you got your entire financial future or no financial future tied up in the business? Can you start diversifying so you have investments other than your business? Does your business have a value in the market place or is it just a job?
6. Changes in legislation such as taxation and superannuation can change the strategies for the protection of your assets. Review this annually also.
7. Properly review your insurance renewals each year. Consider your changed circumstances and ensure your insurances take this into account. Insure what you cannot afford to lose.
8. Have a plan - evaluate it and action it regularly
Future articles will consider other strategies for asset protection that may cost more but may provide greater benefits.