How Would Your Company Survive the Loss of a Key Employee?
May 26, 2015 | Business and Careers
“It’s been a wild ride,” said Tim Bauer, co-founder of Valore Partners, as he reminisced with business partner Pete Miller shortly before the company’s 10-year anniversary.
Valore Partners is an information technology consulting firm in Tempe, Arizona, that helps companies succeed in the age of cloud computing. Last year, with business booming, the partners decided that it was time to expand. Bauer would relocate to the Los Angeles area to establish a foothold in California.
“I picked everything up and moved to Southern California in October 2014,” said Bauer. But the excitement of scouting potential clients quickly faded. “The first weekend that I got to California, I was watching a movie; and I noticed I couldn’t see out of my right eye. I was totally blind in my right eye,” he said.
Hours later a doctor would tell Bauer the retinas in both his eyes had detached and he was in danger of becoming permanently blind unless he underwent emergency surgery.
“Suddenly all of our expansion plans were on hold,” said Bauer. He underwent a total of four complex surgeries that left him temporarily blind in both eyes and immobile during the initial phase of his recovery.
“You don’t think something like a disability can impact your business,” said Miller, the company’s general manager. “But it does.”
The partners worried about the company’s future. They had spent a significant amount of marketing dollars in California. But with Bauer unable to work, they wouldn’t be able to follow through with their marketing plans. They also were concerned about the impact of Bauer’s absence on clients and employees.
How could the company survive without one of its key leaders? What if the company couldn’t maintain its financial obligations? What if they couldn’t keep their commitments to their employees—their most valued assets?
Fortunately, Bauer and Miller had gone through a list of “what ifs” a few years before with Rick Beyer, a financial representative with Northwestern Mutual. Beyer began talking to the partners about risk management just as the company was starting to grow.
“I could tell by their enthusiasm and passion that they were onto something very special. They were building a dynamic business,” said Beyer. “We spent a lot of time talking about the business and the different scenarios that could impact their company moving forward. We searched for solutions that would allow them to continue growing.”
Beyer asked tough questions, including how the company would survive following the death or disability of a partner. “It’s a difficult topic to address, but it’s crucial if you own a business,” he said.
After much consideration, Bauer and Miller decided to buy insurance to cover a number of potential risks. Among the types of insurance they purchased was a disability overhead expense policy to protect the company in the event one of the owners became sick or hurt and was unable to work for an extended period of time.
“A disability overhead expense policy is designed to reimburse the business for certain operating expenses if the owner becomes totally or partially disabled,” said Beyer. The business has been able to recoup some of its losses thanks to the policy. “Northwestern Mutual provides a monthly benefit that the company can use to offset the financial losses they experienced as a result of Tim’s disability,” he said.
Having the protection was a relief for Bauer, who felt his medical issue was dragging the company down. “As a leader, I felt a tremendous sense of responsibility for our employees and their families. From a financial perspective, we were better able to take care of our employees because we were smart enough to have this policy.”
“It’s hard to part with money for something you hope you will never use,” added Miller. “But I’m glad we had this insurance policy in place.”
With the crisis behind them, Valore Partners is strategically positioned to begin a new chapter. Bauer is on the mend, as well. Though some health challenges remain, Bauer is back to doing what he does best—building relationships with potential clients. “The future is as bright as it has ever been,” he said.
Disability insurance policies have exclusions, limitations, reduction of benefits, terms under which the policy may be continued in force or discontinued. Eligibility for disability insurance, additional policy benefits and qualification for benefits is determined on a case-by-case basis. State variations may also apply. For costs and complete details of coverage, contact a Northwestern Mutual financial representative.