Entrepreneurs become ‘entrepreneurs’ for one or all of the following reasons.
There is usually not much more. But these things are easier said than done. Today, setting up a business requires a big capital. Sometimes additional capital is required to expand the company to hire more people, or to buy equipment, or even to get a better office etc. Entrepreneurs tend to spend their life savings on these expenses. This exposes them and their family to a number of risks.
Legal Risks :
1. Firstly, all the personal and business assets of an expat are subject to distribution as per the law of the land (Shari’ah Law) regardless of nationality and religion.
2. The guardianship of the children of the deceased is not automatically granted to the mother. The father-in-law gets automatic guardianship of the children.
3. Shari’ah law places high importance on the settlement of any liabilities of a person. This includes personal and business liabilities.
4. So when an expat passes away, his dependent’s visas are canceled and they have 30 days to leave the country.
5. Then his personal and business bank accounts may be frozen (within one hour) till such time as all the liabilities are cleared.
6. Once liabilities are cleared, if a will has been registered, it may be executed as per the wishes of the deceased.
7. In the absence of a registered will, the estate of the deceased is distributed as per Shari’ah law. This has a huge impact on the family of a business owner because they may be left with no access to their bank accounts, credit, and ATM cards when the father dies, sometimes for as long as 2 years till the courts decide on how to distribute the assets.
Entrepreneurs tend to invest everything in their business because they believe that their business is the best investment in terms of returns. Moreover, some dedicated business owners don’t take salary and reinvest any business profits made, back in the business. Since all of his/her wealth is invested in the business, it becomes the only source of income and weakness point. If the business fails somehow, or see the demise of the owner that too without any income protection, could leave their family stranded without any income.
The major questions a business owner must face in relation to business risks.
1. If a business owner dies, how will the family get the money that was invested in the business?
2. If a partner dies, what happens to the partner’s invested capital?
3. In the absence of the owner, how will the business get adequate working capital to continue operations?
4. How will the suppliers be paid the amounts due to them?
5. What happens to the outstanding debt in the market due to customers? 6. How will the bank financing be paid back without losing pledged assets?
7. If the star salesperson, or the person responsible for the entire operations dies, what loss will be incurred by the company and how will it be protected?
8. If employees leave when the owner dies, how will their gratuities be paid as per labor law?
9. How are personal and business assets pledged to the bank as collateral protected against forfeiture if the owner dies?