Anecdotal evidence suggests few of our members have actually given any meaningful thought to succession arising from death or serious injury. Rather, most members only really think about “handing the business on to the kids” or “selling it off” to support retirement.
Regrettably, death or serious injury of family member, business partner or key staff member is quite common place and often/generally unexpected. Invariably such an event is also damaging to business value, market position and brand cache. Yes it does sound harsh to even mention these “business issues” in the context of a family or close death, but that is reality and too many times too little thought or planning has been undertaken to provide for this contingency.
A great percentage of our members are small business operators, with family involvement and close staff relationships. Death or serious injury brings emotion, distraction, pain and grief, all rendering the management of the business even more difficult.
There are many resources available to members. The Family Business Association (for those in family businesses), our own SSAA for all our members, bankers, lawyers and advisors abound. The critical step is recognising that there is a risk. Face the fact that things do go wrong and plan for the contingency. A risk assessment is the starting point.
Think about who is/are key people in your business. Long term or highly trained staff fit this category. It’s not all about you!
• What risks follow?
Consider how your business would be affected by death or serious injury to the main players. What knowledge does the person have, what skills need to be replicated and relationships managed. How do we deal with both grief the continued operation of the business?
• How do we handle an unexpected event?
Is there a plan and a process to follow? Do you sell the business? Bring in extra staff? How are these decisions made? What about customer loyalty and relationships… and the bank loan?
• What are the financial consequences?
How do you cover the cost? Is there a sinking fund or an insurance policy?
These are a handful of simple questions, many of which lead to complex answers.
If you haven’t started your Succession Plan…. DO IT NOW!
I know from personal experience that good heath is not always a given. Death or injury can strike without notice and damage to the business can be long term. I know, also from personal experience, when two years ago, one of our facility managers suffered a serious injury, just before Christmas. He was off work for almost 12 months, faced months of rehab, and medical treatments. But the business needed to be lead and continued to operate in his absence. Who fills the void? Is the person trained and equipped? Who pays for the extra staff and so on? Fortunately, we were prepared with our staff training and flexible resources. But we had a plan and it saw a happy outcome.
Our SSAA is a valuable resource to use when you commence your plan and can offer guidance and assistance to members. Be sure to use it. You never know when you may need to!