Business Survival Succession Planning

There can be nothing worse for a company that has its own die soon … especially when it comes to your business.

Look what can happen to a company when the owner dies.

Todd Carpenter was the sole owner of 55 years, a successful construction company. Todd hopes to sell its business to a third over the next 18 months.

Todd I needed was a way to ensure that your business could survive if he died or became disabled during this period. Before I could put a plan in place, Todd died in a tragic accident. Shortly after his death, the key employees left the company for future jobs more determined. They feared that the company could not continue without the leadership of  Todd and staff support.

Employee departures resulted in a reduction in revenue, and the absence of a number of contracts, which exposes the company to significant liabilities. longtime customers are uncomfortable with what they perceive as a ship without a rudder and moved his business to competitors Todd. the bank grew restless and Todd decided to call the debt of his company, Todd had personally guaranteed the debt.

A few weeks after the death of Todd, his key managers have gone to pay his company a series of contracts, revenues declined, customers have jumped ship and all funding opportunities for the replacement quickly disappeared.

As you can see, planning for business continuity is vital to your business. Without well thought out “survival plan” on the consequences for employees, customers and, most importantly, your family and your property are disastrous. (Do not think that their property is to escape the attention of the creditors of your business.)

Fortunately, a number of unique methods owners can implement today to help prevent the kind of commercial collapse Todd experienced carpenter.

First, keep key employees on board after his disappearance, the supply of goods, perhaps by agreement for sale, or offer additional compensation if the key employees to stay or to continue to lead the company. The amount of compensation can be linked directly to profitability and continued success. As an added incentive to offer these employees a substantial premium (called “stay bonus”) to remain with the company, which can be funded with insurance who can be consulted in case of his death.

Second, alert your bank for succession planning. Meet with your banker to discuss the arrangements they have made and show that he or she is sure that the effect of these plans are in place. Make sure your creditors are comfortable with your estate plan. Ask what provisions they would like to see implemented.

Third, create a written plan that states:
1) you must take responsibility for managing the business;
2) whether the company should be sold (and if so to whom), continued or liquidated, and
3) that his heirs should consult with respect to the sale, continuation or liquidation of the company.

Finally, working closely with professional insurance may be required for certain insurance products, such as bond financing agreement subsistence or sale, are acquired by the institution itself, (you, your trust or company) for the right reason and the exact amount.

Not sure where to start? Contact your team of business advisors – lawyer, banker, insurance agent, CPA – for recommendations.

Tags: , ,

Sunday, January 2nd, 2011 Business Plan, Business Strategy

Leave a Reply