Is your succession plan is in place?
Misfortune seems to have followed me around lately. A friend had a massive heart attack, a friend’s father is diagnosed with terminal liver disease, three friends have lost a parent… Tragedy happens and many times we don’t see it coming. Joan Rivers did it right. She left instructions for Melisa regarding what she wanted for her funeral. I on the other hand had the experience of sitting in the funeral director’s office with my four brothers, with no idea what dad would have liked. Outside of the awkwardness of not knowing the right answers, we planned a ceremony that we believe dad would have been proud of and mom appreciated.
We plan for some tragedies: we know where to exit the building in case of fire or hazardous weather, we insure our vehicles and homes in case of tragedy, and we may have even completed our estate and pre-need funeral planning. However, our companies are generally our biggest asset and often we haven’t given them as much attention in case of a tragedy as we have our car.
It’s easy to neglect to plan for these tragedies because they are difficult emotional conversations that are easy to put off. Yet without this planning our business may suffer or even fail, we may have to terminate good employees who were relying on us or we may have to have a difficult conversation with the partner’s widow to explain that the company is worth significantly less than anticipated. Putting off the conversation does not make it easier; it makes it much more difficult.
It is never too early to start planning and the best time to start is TODAY!!!! Sit down with your trusted advisors, partners and key employees and discuss what does the business do if one of your key people is lost? Who will do the work; find the leads; generate the revenue? Will the company need to find and hire the talent or will it be internal. How does the business continue to operate in the short term when a key employee is lost? Should the company have life insurance to help fill some of this gap? These are the first questions to answer because if we can’t keep the business going profitably, there will be no value available to the estate or to the remaining owners.
As difficult as the conversations may be, they are much simpler in the a normal course of business than during the middle of a personal and business tragedy. If you have been through this process but it has been a few years, revisit your plan and insure it addresses the changes your business has gone through.