One missing personcan sink a business —unless you plan.

In many SMEs, a few people hold everything together — the founder who brings in clients, the partner who runs operations, the specialist nobody else can replace. If one of them passed away or became critically ill, the business could struggle, even if everything else is going well.

Case study · McDonald’s, 2004

This isn’t only a small-business problem. On 19 April 2004, McDonald’s chief executive Jim Cantalupo died suddenly of a heart attack at the company’s franchisee convention in Florida. Within hours, the board named Charlie Bell as the new CEO — the heir apparent it had lined up more than a year earlier. Weeks later, Bell was diagnosed with cancer; he stepped down that November and passed away in January 2005. The world’s biggest restaurant chain lost two leaders in nine months, and kept running, because it had planned for the unthinkable.

Case study · Genting, Malaysia

Closer to home, Genting shows the same lesson from the other side. Tan Sri Lim Goh Tong opened Genting Highlands in 1971 and built it into one of Malaysia’s best-known groups. He didn’t wait for a crisis to plan his exit: his son, Lim Kok Thay, had served as a director since 1976, and on 31 December 2003 the founder handed him the chairmanship. When Tan Sri Lim passed away in October 2007, aged 89, the business was already in steady hands — the handover had happened four years earlier, while he was still there to guide it.

The research

Most SMEs don’t have that depth. A study of around 1,500 entrepreneur deaths in Norway, published in the Review of Finance (Becker and Hvide, 2022), found that among larger startups, sales were on average about 60% lower after the founder died. When a business depends on one or two people, their absence is felt immediately.

Sales were about 60% lower after the founder died.

The solution

Keyman cover is a policy the business takes on a key person. If something happens to that person, the business receives a payout to help it through: covering lost revenue, finding and training a replacement, or reassuring lenders and clients.

Shareholder (or partnership) cover helps the remaining owners buy the shares of a partner who has passed away or become critically ill — usually at a value agreed in advance. The family receives fair value for the shares, and the business stays with the people running it.

Group cover protects your wider team with life and medical benefits. It is a meaningful way to look after staff, and it helps you attract and keep good people.

Every business is different, so the right mix depends on your structure, your people and your plans. A short conversation with your partners — and with an advisor — is a prudent first step. Your accountant or lawyer can help with the agreements that go alongside the cover.