You’ve worked hard to build a strong, solid business. The ability to keep that business intact – even when an unexpected event happens – is born out of good planning. Although not pleasant to think about, all business owners should consider what would happen if they or a co-owner should die, become incapacitated, or otherwise have to leave the business unexpectedly. A business continuity plan considers what happens to your family, company, and staff if these situations ever arise.
The strongest businesses, and those that will remain strong, typically have a business continuity plan in place. This document provides specific plans designed to address unexpected events and mitigate risk. To create your company’s own written business continuity instructions, start by considering three major areas.
First Things First – Yourself
As is the case with most emergencies, you need to focus on protecting yourself before you can begin protecting others. One of the first and most important questions to ask as you start your planning is, “Can this business survive without me?”
If the answer is “No,” the first step is to figure out how you can make yourself dispensable to the business. If the answer is “Yes,” your business continuity instructions should specify how things would change so that the business could survive without you and continue to operate seamlessly.
As you are developing your business continuity plan, start by addressing – in writing – important aspects of your business’ strengths and weaknesses with and without you. For example, if you use personal guarantees when taking on company debt, what will happen to your family if you were gone and your company’s creditors initiated claims against your personal estate? What would happen to your business if you were no longer available and/or unable to provide personal guarantees?
For most businesses, the buck stops with the owner to make final, major decisions. Business continuity instructions should include guidance to co-owners, employees, and family about who will make which decisions and how things will be carried on without you should you be incapable of filling your current role.
Protect What Matters Most
Business continuity instructions provide plans for the unexpected absence of the business owner. But they also are designed to mitigate risks and address priorities. They can be a starting point for dealing with the loss of a key employee, whose absence, and the loss of their unique contributions, would harm the company. If that employee should join a competitor, it could do double damage to your company.
As you develop your business continuity plan, work with your leadership team and trusted advisors to put in place lucrative incentives for key employees to stay and consider non-compete agreements.
Similarly, business continuity instructions can help minimize risks for your family. Without written instructions, your family may find themselves at a loss to navigate the path forward. With a plan, they have no question about how you intended to handle – or have already addressed – specific situations.
Plan for Events You Can’t Control
Business continuity plans can anticipate events that could impact your business but are out of your control and provide contingency instructions. Examples of such events are a key customer filing bankruptcy, a primary vendor going out of business, supply chain disruptions, and labor shortages – some of which many businesses are dealing with now so pay attention to what works. Identifying and thinking through events that could adversely impact your business and how you’d handle them if you were there, is an important part of the process of creating a business continuity plan to minimize the risk to your business due to outside events that are out of your control.
Take Steps Now
Many individuals and other businesses depend on yours. So don’t leave their futures to chance. Take time now to anticipate, address, and document the events and circumstances that would need your attention and how to minimize risks in your absence. A business continuity plan can mean the solid business you’ve built remains strong. What better legacy can you leave?
A business continuity plan is an important part of an exit strategy. As with all exit planning, it benefits your business today. I’d welcome the opportunity to help you put these important plans and documents in place. Contact me for a complimentary consultation.