As owners approach their business exits, two issues that can easily be overlooked are their premature (unexpected) death and permanent incapacitation. These issues are unsettling because 1) there is no comfort in contemplating situations that are out of our control and 2) they hijack an owner’s long-planned culmination of their business career: a successful business exit. We define a successful exit as one that provides a financial return on a lifetime of work and achieves an owner’s personal objectives. Failing to put contingency plans in place can have catastrophic consequences as the following case study illustrates. Bud Brown, an Owner-Based Planning Advisor, woke up early on a Monday morning with great anticipation. He and one of his clients, Bruce Delany—a successful business owner and longtime friend—were expecting an offer from a thirdparty buyer. As Bud finished his second cup of coffee, Bruce’s wife, Dolores, showed up on his caller ID. He answered with a warm, “Good morning, Dolores. Excited about today?”
“Bruce is dead,” Dolores said flatly.
“What do you mean Bruce is dead?” Bud asked. “I had lunch with him yesterday.”
“He was exercising.” Dolores said quietly. “The doctor said Bruce had a heart attack before he fell and hit his head. I don’t know what I’m supposed to do, but Bruce always told me to call you if something happened to him.”
When owners die or face permanent incapacitation, they no longer control their companies, much less their lives. Cruelly thrust into a position of responsibility are their families regardless of their business acumen or leadership capabilities. Typically, family members in this position wish they had asked the owner important questions and could ask for advice. Unfortunately, that is impossible.
Prepare Your Family
Since you are reading this newsletter, you have the opportunity to prepare your family should you become unable to run your company or, worse, die. We recommend that you take that opportunity and prepare Business Continuity Instructions (BCI).
Contents of a BCI
BCI function as a non-binding, accessible and comprehensive guide that your family and loved ones can use to address business concerns and personal finances if you aren’t able to do so. Your BCI can include information about:
- Whom your family should contact and for what information.
- Who should fill various roles in your company.
- How company ownership should be handled.
- Your vision for your company.
- The plans you’ve made to equip your family to maintain its current lifestyle.
We recommend that your BCI are written in easy-to-understand language.
Business Continuity Instructions for All!
Of course, you don’t need to be actively considering a business exit to benefit from BCI. Just the exercise of creating them makes you look at your company from a new perspective. Who are the advisors your family could turn to for help? Which of your responsibilities could others assume? What processes should you put in place that would not only help your survivors but would make your business valuable to a one-day prospective buyer. (See our article about transferable value.)
Getting Started
The items that you can include in your BCI are as unique as you and your business are. If you are interested in giving your family the invaluable gift of your wisdom, and your company a guide for how it might continue without you, please contact us today. We can help you create and keep current the BCI your family will, we hope, never need.
We are here to Help!
We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their families. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.
The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Business Enterprise Institute, Inc. is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.
This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm. We appreciate your interest.
Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.
