Many years ago my neighbor, an attorney, who had his own practice, was stung by a bee. For some this people this would be a minor pain, however in this case he was allergic to bees. The rescue squad just minutes away, did not arrive in time to save him. He had no life insurance and no business plan. His law firm withered away. His family had hard times. The bank eventually had to foreclose on his home. The children thinking they were set for college had to work their way through.
Life is full of unexpected events. Do you remember your mother telling you as a small child to change your underwear, in case you are in a car accident? Somehow I don’t think that would be that important but what would happen to your business or job if you had a car accident that left you unable to work? Do you have an emergency plan to take care of your family and your job or business? Could someone step up and take over for a short time? How about permanently?
My first thought is do you have insurance? Insurance can help give your survivors time to adapt or to hang in there for a period of time. Insurance would include disability and life insurance. But someone would still have to clean up what you left behind.
Will your family have the resources and knowledge to handle the projects you have in process? Will they be able to stay in the house? Finish their education? Retire at some point?
If you are self-employed how are you going to meet your commitments to your customers? How about to your employees? What will happen to your business?
Does anyone have financial authority to close your business or keep it going so it can be sold? Does anyone have access to your passwords? Or will that all be lost? Is your family relying on your business value to move forward?
Insurance is great! However consider an emergency business succession plan. A plan that can help retain the value of your business until a final solution can be arranged. If you are a critical key element to the financial success of your business – the financial value is dependent upon you. Many business owners have a long term succession plan, but don’t think about a succession plan in the case of an unexpected event.
If you do have a plan – does anyone else know about it? Is it written and your survivors or key business advisors aware of it? Have you made arrangements for someone to step in and make decisions that can’t wait?
In my situation, I do have arrangements. Yes, I hope it never has to be implemented, but I did give it some thought. The written plan and instructions are in my safety deposit box, along with a copy of my will, so my personal representative can resolve the situation to my benefit or the benefit of my heirs.
Contact us if you would like assistance in creating a backup plan for your business.
By Mary Guldan-Lindstrom, CPA