This past year, the owner of a family business died and the general manager quit. My role? To keep the company operating and prepare to sell it. The business had been very dependent on the owner and there was no plan for business owner disruption, which made my role very difficult. Would your business survive if you died or had a serious health issue which prevented you from working? Does your business have a solid transition plan? If not, you need to read this.
No Business Owner Disruption Plan? You’re Not the Only One
You are certainly not alone if you don’t have a transition plan which should include a business owner disruption plan. According to a recent study in the US by Wilmington Trust, only 58% of small business owners have one, and I believe if you ask those owners, most will say that it isn’t written down, which isn’t truly a plan.
So, let’s discuss business owner disruption planning. Because so many older business owners haven’t done business transition planning, and certainly not business owner disruption planning, I foresee that there will be many more situations where the owner’s family will have to bring in someone to keep the company operating and potentially get it ready to sell.
Planning Your Business Without You
Ideally, your business would continue to grow and thrive without you whether your absence from the business was planned or not. Doing this is one of the ways to increase the value of your business and make it more saleable.
(Read “Major Part of Increasing Value Is Decreasing Risk” in the December 2018 issue of The Wise Business Owner Gazette – go to www.profitablewisdom.com to subscribe and receive this issue immediately.)
A plan to address business owner disruption should do the following:
- Highlight your guiding principles and philosophy that you follow in conducting business so that those running the business without you can follow these same principles
- Name a successor to run the business and if this successor couldn’t fulfill this role, the plan should provide for interim management
- Outline the outside support that you recommend your successor seek
- List the external relationships that should be maintained in your absence
- Provide the location of important documents
- Create a step-by-step guide that outlines what to do when the owner is absent
After you have created the plan, communicate it to everyone who could potentially be affected and describe to each person their role when this disruption occurs. Review this plan frequently. Even better, give it a test drive by going on a 3- to 6-month sabbatical from the business.
Start Your Business Owner Disruption Plan Today
Business owner disruption planning is a key component of business transition or exit planning because sometimes events don’t always go according to plan. Many articles have been written in the last ten years on business transition, but it seems that most business owners are still not heeding this advice. I explain more about business transition planning and business owner disruption planning in my course, Finance for the Non-Financial Leader. Sign up for the course today.
If you have any questions about Finance for the Non-Financial Leader or would like help with your business transition plan or your business owner disruption plan, contact me at firstname.lastname@example.org or (226) 791-0374 and arrange a no-obligation conversation.