In 2012, entrepreneur Sue Rizzello found herself blindsided by a diagnosis of ovarian cancer, a disease for which symptoms are often overlooked.
Rizzello survived thanks to a radical treatment in the form of a Petroc trial. She entered remission in January 2013, but lamented the harm her illness caused to her PR company, Potion.
Although she had taken little time off and worked from her hospital bed, the side-effects of chemotherapy made work and keeping up with clients difficult.
“I became ill remarkably fast and it pulled the rug from under the business,” she says. “I had no key man insurance [life insurance on the key person in a business], no senior person in the firm who could step up, so when I entered chemotherapy almost [as soon as I was diagnosed] I had to effectively virtualise the company, losing the offices and moving everyone to freelance.
“My accountant had been warning me for years that I ought to have key man insurance in place but the problem is we tend to think we are immortal.”
Rizzello, who has since dissolved Potion and set up a new business called Remedy Services, has learned several lessons from the loss of her first business. “Now I have better plans in place for, ‘What if’,” she says. These include keeping outgoings as low as possible and making sure large bills don’t arrive at inconvenient times. Rizzello only invests in short-term software deals and has negotiated a fixed monthly price for business accounting. When she needs extra staff, she uses freelancers.
She adds: “I save money in advance for any foreseeable business expense, including VAT and PAYE costs, so I reduce the risks if a bad month or quarter comes. I can’t effectively mitigate against the possibility of a longer term illness any more, I’m not yet very insurable as I haven’t survived five years [since entering remission] yet. But I’m trying to make sure my domestic finances stay in decent shape, just in case.”
For anyone facing a serious illness, work takes a back seat. But for small business owners, it’s not so simple.
Of the 5.5m private businesses in the UK in 2016, 4.2m (76%) didn’t employ anyone aside from the owner. So what happens when the owner or a key member of staff has to take leave?
Research (pdf) from Legal & General in 2015 revealed that 40% of small businesses would cease trading within a year of losing a key employee or owner. Despite that, 60% didn’t have any business protection in place.
Personal trainer and matcha tea entrepreneur Johnny Harris, who developed the condition hydrocephalus – a build-up of fluid on the brain – aged 18, is a big fan of “future-proofing”. He is aware that his condition could return and worries even more now that he is a husband and father.
Harris, now 38, has worked to ensure his business relies upon him less in case he were to fall ill. In 2012, he launched T-tox, a matcha tea brand aimed at fitness enthusiasts, and recently secured extra funding to build his business through CNBC’s Pop Up Start Up show.
“Let’s say I had to take significant time off, I’ve gone from selling myself to selling a product,” he says “In terms of future-proofing, it’s about building a business that will support me when I’m not working.”
If you are self-employed, you may be entitled to support from the government to top up your income in difficult times. If you’re working for yourself full time but your income falls, you may qualify for working tax credits. Or, if you already claim these, they could increase.
If you find yourself unable to work because of illness, injury or disability, while you may not be able to get sick pay, you might be entitled to benefits to supplement or replace your earnings, such as employment and support allowance, or personal independence payment. And other benefits exist to help with mortgage interest or council tax if you experience a sudden drop in income.
Financial products, such as key man insurance, are available to protect your business from being crippled by the loss of key staff, says Peter Alderson, managing director of small and medium-sized business lender LDF.
Of the 10,000 businesses LDF lends to, about 8,000 have three or less employees. This means that if even one is absent, it can have a disastrous effect.
People management is also key in the face of a prolonged absence. Francois Landers, head of SME development at HR professional body CIPD, says this includes being clear on each employee’s role, and spreading responsibility: “If you have only got four or five members of staff you have got to be really clear about who does what, [doing so will flag] any pinch points that could be an issue if someone has to be off.”
Faye Smith’s Sheffield-based PR, marketing and personal branding company Keep Your Fork was built around her and her expertise. But when her husband and her 12-year-old daughter died within a few years of each other, she was forced to rethink the structure of her business.
“Gabi died on the Saturday morning. My GP came round on the Monday, got her pad out and said, ‘I’ll sign you off’. I said, ‘From who?’”
Generous friends and clients raised a few thousand pounds on a charity fundraising platform, allowing Smith to take time off to grieve – but she acknowledges that such generosity isn’t something business owners should rely on.
The business no longer relies solely on Smith, she now has two permanent staff, a business development manager and freelance help.
“If there’s one thing I have learned it’s that you never know what’s round the corner. Tragedy can happen to anyone, but you need to take personal responsibility.”
Five ways to prepare for personal adversity
1 Plan for the worst. When planning a new business, think through every eventuality, even those to do with your health or family problems.
2 Employ the right people and don’t be scared to delegate. Share knowledge and responsibility.
3 Protect yourself – insurance will be a lifeline if you have to take time out.
4 Don’t over-commit – look at hiring freelancers or working virtually if you can’t guarantee stable income.
5 Communicate and ask for help – you might not want to admit defeat, but communicating with staff, customers and suppliers in times of difficulty could provide essential leeway.
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