Make a Succession Plan Before You Need One
Perhaps you have your personal affairs in order – a will, life insurance, etc. – but what about your business affairs? Who will step in to keep your business running smoothly in the event of your death or serious injury? A succession plan is a critical, strategic tool to ensuring everything you’ve worked for can continue if disaster strikes.
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 (hint: that’s quite a lot!). 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 longer than 15 minutes at a time. That means he couldn’t fly to China. As well, he couldn’t work in a traditional setting. As a result, he was unable to successfully operate his business, and he couldn’t maintain the relationships he established with his Chinese suppliers. He’d always handled this important relationship on his own. So, there was no one to step in and keep this important relationship intact. After a couple of months, the business owner could not receive orders from China.
The business closed, which included the jobs of four people. Plus, a lawsuit was initiated to determine the possible loss of earning capacity of the business owner.
Make a Succession Plan Before It’s Too Late
Of course, all of this could have been resolved if critical business succession planning had been implemented. Succession planning defines who is going to take over when the owner 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. Then the company ends up either being financially devastated and/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 after an accident has occurred is too late. This is an issue that requires proactive thought, planning, and consideration; not high-emotion reaction. Read here to learn more about succession planning, then give us a call.