In an ideal world, your business will continue to flourish long after you have exited. In reality, not everything works out accordingly. Having a solid plan for your business’s continuity after you are gone is very important. Multiple circumstances can arise that, without a sufficient plan, can leave your employees flailing.
Exit planning from both the owner and those next in line are of the utmost importance because the lack of experience and understanding of how to handle the business should the owner suddenly die or become disabled can be detrimental to the owner’s family, and can possibly bankrupt the business. A buy-sell agreement is essential to the continuity of a business, but it is only one part of exit planning.
Common mistakes often include, but are not limited to: failing to deal with a financial continuity plan when a co-owner dies, failing to deal with the management or leadership of the business when the “leader” of the business dies, and failing to deal with financial, leadership, or business continuity when the sole owner of the business dies. Morbid as it may sound, we never know when an emergency will be thrown our way. Ideally, a business owner, especially a sole business owner, will have a prewritten continuity plan long before anything should happen. But life is uncertain, and being prepared for the unknown in the business world could make or break what is left of all of your hard work.
It is an excellent idea to be well prepared if such an occasion should arrive. Planning is meant to be something done before an exit, either an intentional or unintentional exit. Start planning now to avoid having you or your family watch your business suffer.