Last week, we shared a cautionary tale about the dangers of poor business continuity planning. Today, we're giving you a list of planning essentials for your business. Ask yourself each of the following questions and determine if your planning needs some work.
Can my business continue to run without me?
Nobody likes to think about it, but reality is that we are all mortal. If something were to happen to you, be it an accident, injury, incapacity, or even death, and you were unable to work, would your business carry on in your absence? You may assume so, especially if you have employees or partners who you trust to keep calm and carry on without you, but do they really have the authority to do so? Is anyone other than you authorized to sign checks, enter into contracts, run payroll, or make business decisions? If not, your business may grind to a halt should you be out of commission for an extended period of time. This could leave your employees and family who depend on the company for their livelihood in a tough situation as they petition the courts for the authority to manage your affairs.
Do I have a plan for the business after I die?
Unfortunately, many business owners don't consider what will happen to their company after they die. Though some may assume that once they are gone, their business will be gone as well, this is incorrect. A business other than a sole proprietorship is its own legal entity and will continue to exist after the owner's death. Therefore, you must plan for it. Alternatively, some business owners have a general idea of what they want to happen to the business, but they do not take the proper steps to ensure that their plan is carried out. Perhaps they have always planned to pass the business down to a child, but this is not recorded in any official documents. If no one is officially authorized to take over operations after the owner's death, the responsibility of sorting out the mess could fall on his executor, and lead to conflict amongst both family and employees. It is essential that you work with an attorney to make a wise and effective succession plan.
Are my business partner and I on the same page?
If you co-own your business with one or more partners, you need to know what each person plans to do with their stake in the business, either at their death or if they leave by choice. If you want to leave your share to a spouse or child, you should make sure that they are capable, prepared, and willing to take over your role, as well as make sure that your partner is willing to work with them. You could also give your partner the option of purchasing your interest in the company at an agreed upon price using an agreed upon formula. Whatever you plan to do, you need to have conversations with your business partner to ensure you agree with each other's plans now, before conflict arises later. Then, it is critical to document those plans in a written contract to ensure that the plan is known and followed.
If your answers to any of these questions left you in doubt that you have all the necessary plans in place to protect your business should something happen to you, The Beck Law Firm, LLC can help. Give us a call at (678) 344-5342 to schedule an appointment to discuss your business continuity needs.