Business ownership is complicated. During start-up, it is important to consider every scenario and detail of a business model. Once open, though, many owners focus on management and growth, relying on their own expertise to get them through the problems that may arise.
When a business owner becomes unexpectedly ill or passes away, it creates many challenges for the company. Even outside of complex business operations, this is a highly regulated society. Giving a used car to a loved one requires paperwork. A change of ownership or business responsibilities is no simple task.
Communication is a key to success
Most small business owners rely on their own experience, knowledge and judgement. They certainly share key information with family members and business partners, but an unexpected absence puts new people in charge of the brand, client conversations, financial documents, spending accounts and more. While most owners share access to official documents, many items have restricted or personal information that can be difficult for others to access:
- Email access
- Social media
- Bank accounts
- Professional licenses
All of these tools are vital to a company’s operation, whether through professional certification, customer communication or financial matters.
Documentation can provide access
When the owner is unavailable or incapacitated, the right legal documentation can share important access or decision-making capabilities with family members, business partners and other key players. This information should be guarded closely by any business, but an emergency plan can keep a difficult situation from growing worse.
Whether it is for a short-term layoff or a permanent transition to new ownership, all businesses need to prepare for this situation. Many business owners have a successor in mind, but professional surveys conducted by banks and insurance companies show that most businesses do not have a formal succession plan.
Prepare an answer for every question
A missing succession plan creates undue hardship on the business itself, not to mention the stress it places on widows, children, heirs, business partners and employees. Just like at start-up, it is important to consider every possible situation a business may face as it grows – and to have a backup plan ready just in case. Experience and leadership are important in daily operations, but a formal plan that keeps the company functional and in compliance with local regulation is a key to sustainable, long-term success.