Many people begin the new year with hopeful resolutions, but they forget to prepare for what will happen if things don't go as planned. Accidents happen and as a small business owner, it is important that you draft a contingency plan so that you are prepared in the event of an emergency. If you have not prepared for a disaster, the consequences for your loved ones and colleagues can be worse.
Draft or Update Your Will
Most people carry some type of life insurance but 63% of Americans do not have a will in place. Sometimes, we draft one when children are born but fail to revisit and update. I have met with prospective clients whose wills were over 50 years old. In multiple cases, I have read wills where beneficiaries and trustees have passed away or the children are now age of majority but the wills have guardians in place as they were minors when the documents were drafted.
Create a Contingency Plan
For business owners, there is another level of complexity. Business owners do not always think about who has access to their files, banking information or who will maintain client relationships, have the ability to execute payroll and other key functions of running the business. Not only is the entrepreneur essential to the businesses’ mission and execution but the entire business can be at risk if no plan is in place for an interim or permanent absence. In the event of an accident or an emergency, every business should have a continuity plan in place. (For related reading, see: How to Create a Business Succession Plan.)
An ideal contingency plan is a written, comprehensive plan with key employees in place to assume the roles of the CEO and a plan for notifying clients/customers as well as keeping business operations running. Few businesses have taken the time to create a plan and no one ever likes to think about death or disability, but accidents do happen.
In an ideal world, a key employee or a family member should also have power of attorney in place to make financial decisions and access banking information and anything financial. Banks prefer to have their own forms on file so even if you have your own durable power of attorney executed, it makes sense to order and implement the financial institution’s forms.
We worked with one client over the past few years who started her business at age 55 and is now 70. She has a staff of 30, travels all around the world, has big-name clients and lots of projects in various countries. There is a a lot of complexity in the operations of her business. Yet, she has no formal or informal succession plan.
She is the quintessential type A personality who controls everything and can often over analyze any decision causing what we call “paralysis by analysis.” She is also the rainmaker and key contact for the businesses’ clients. But she has 30 people whose livelihood rests on her ability to function. Should something happen to her, she does have a semi-formal controller position who can continue to handle payroll and cash flow. However, the risk is that big clients would question whether the company can function in the absence of the CEO and could terminate their contracts leaving the business defunct very quickly. (For related reading from this author, see: Successful Succession Plans Depend on Your Team.)
Consider a Long-Term Succession Plan
As you lay out your business goals for 2018, it makes sense to consider creating a contingency plan in the event you are disabled or pass on. As business owners, we have our employees relying on us for their future security as well as our core family members. If family members are in the business, this takes on even greater importance. A contingency plan is a good way to begin thinking about a longer-term succession plan. No one likes to think about death or disability but they are a fact of life. It can help to spend some time dissecting your role as CEO if you have not done so formally.
Think about who is the next best person to delegate tasks and operations to in terms of the overall business. While your significant other may make sense as a power of attorney, he or she may not know anything about the operations. Dealing with a sudden death or disability of their life partner can leave a spouse overwhelmed and it may not make sense to add the burden of business operations to his/her plate.
In my own line of work, we help family businesses and privately-held businesses create long-term plans to reduce risk, save on estate and capital gains taxes and preserve what they built. We have witnessed a wide variety of situations which would be hard to imagine in advance. As a small business owner, you should plan for the best and set optimistic goals for success. But don't forget to prepare for the things you don't want to imagine happening. (For related reading from the author, see: Keep the Family Business Going With a Succession Plan.)
cr. https://www.investopedia.com/advisor-network/articles/accidents-happen-are-you-prepared/
ไม่มีความคิดเห็น:
แสดงความคิดเห็น