Succession Planning– Who Is Going To Take Over?
A recent truck-trailer accident left the principal of the firm unable to work. Although not permanently injured, the individual was hurt to the point where he spent several weeks in rehabilitation along with continual daily medical treatment.
His company imported a product from China, an office goods product used in every office. In fact, in the 20 years that the individual had been in business, he had grown the business to the point where he ordered 45-50 shipping containers at a time of this product. The business owner developed a strong, working, cordial relationship with his Chinese suppliers. The business owner traveled to China 3-4 times a year to visit the factory and maintain relationships with his Chinese suppliers.
After the truck-trailer accident, the business owner was unable to stand or sit for any period of time exceeding about 15 minutes. He was unable to successfully operate his business nor was he able to maintain the relationships he established with his Chinese suppliers. As such, his staff failed to have the relationships with the Chinese suppliers. After a couple of months, his distributor could not get any more product because the business owner could not receive orders from China.
The business closed, 4 people were out of work and a lawsuit was initiated to determine the possible loss of earning capacity of the business owner.
Of course, all of this could have been resolved if key, critical business succession planning had been implemented. Succession planning is the definition of whom is going to take over when the owner either becomes incapacitated or is no longer able to carry on in his/her role within the company.
Sadly, many companies fail to develop exhaustive succession planning until it is too late and the company ends up either going bankrupt or closing.
Now is the time to address this issue. We can help, along with your accountant and attorney. An orderly transition and succession plan allows for smooth operation of the business while it is still a viable, operating entity. Trying to attempt to develop a succession plan when an accident has occurred is both foolish and unwise. This is an issue that requires some thought. Read here to learn more about succession planning.