Are there alternatives to traditional key person insurance for small businesses?

Yes, while traditional key person insurance is the most direct protection, Australian small businesses have several alternative or complementary risk management strategies. Self-insurance involves setting aside business funds in a reserve account to cover potential key person loss, though this requires significant cash reserves, provides no immediate protection for new businesses, and may be inadequate for catastrophic losses. Building redundancy and reducing key person dependency through documentation of critical processes, cross-training employees, implementing succession planning, and developing leadership bench strength reduces reliance on any individual but requires ongoing investment. Business interruption loans or lines of credit provide access to funds during disruption, though they create debt obligations and may not be accessible during crisis periods when creditworthiness is questioned. Retainer agreements with consultants or contractors can provide rapid replacement expertise, though costs can be substantial and expertise may not be immediately available. Partnership or shareholder agreements with buyout provisions funded through personal insurance on partners can address capital needs, though this doesn't protect business operations. Disability overhead expense insurance covers business operating expenses if an owner becomes disabled, though it's limited to owners and has benefit period limitations. Franchise or licensing arrangements can provide business continuity support from the franchisor, though this involves significant structural changes. Income protection insurance on the key person paid by the business provides salary continuation enabling retention of the person in a consulting role during recovery, though it doesn't replace their full contribution. Most risk advisers recommend traditional key person insurance as the primary protection supplemented by operational risk reduction strategies, as alternatives alone rarely provide comprehensive protection against the financial impact of losing critical business personnel.