By now, it is easy for you to run your business or professional practice. You have being doing it for so long that you have encountered most of the potential problems and learned how to deal with them. However, what would happen to your family if you were to suffer a debilitating stroke, or worse, pass away suddenly? Who would take over the operation of the business? Do they know how to do it? Is it fair to your loved ones to leave them with a big mess to clean up?
The simple issues that you find second nature can be totally foreign to a novice manager. Here are a few examples:
- Trying to collect your accounts receivable if you are not there to convince the customers/clients that they still need your company and will pay what they owe.
- Dealing with the accounts payable issues. Who should be paid first, second, third, etc. What about the IRS, FTB, SBE, EDD, and others?
- If there are cash flow problems where does the new manager get cash? Is there a line of credit already in place? If not, why not?
- Who will tell your customers that everything is going to be ok and that they should keep doing business with your company? Do you have an explanatory letter already drafted and ready to be mailed to them?
- What should the new manager do with the debts of your business, the leases, and other contracts that you have entered into over the years? How would they figure out what to do on their own?
Many people believe that we have a moral obligation to our family not to die without leaving a nest egg to care for them in the future. Sometimes people buy life insurance to deal with that issue. However, if you have a business you need an Emergency Business Continuation Plan so that the value of your business is not lost with your demise.
If you can retain your customers, your family can take over the business or sell it. If you pass away with no plan in place, your clients will probably migrate away within a short period of time. If that happens, your family will not get the fair market value of your business. Is that fair to them?
Act now, your loved ones will thank you.