While making sure their current strategies are on target and operations are in sync, business owners also should look beyond today to ensure that plans and processes are in place to protect the long-term best interests of their companies and their families. Here are four key areas owners need to work on to prepare for whatever tomorrow may bring.
If you're the sole owner of your company, do you have a contingency plan for how your business would survive if you died or were permanently disabled? Would one of your heirs assume your role within the company, and would that person be prepared to do so? Would you want someone within the company to succeed you—or an outsider to be hired to replace you?
These are just a few of the many questions that should be addressed in a comprehensive business continuation plan of actions that would be taken if you were no longer able to manage your company. Such a plan, which should be reviewed regularly and complement your personal will and relevant legal directives, can help avoid the internal turmoil, customer erosion, family disputes and disrupted revenue ﬂow that can follow such a loss.
You probably regularly review your company's overall employee benefits program for its effectiveness in helping recruit and retain your staff. But have you made sure you are providing value-added benefits with significant financial and tax advantages for the key executives, managers and high-ranking specialists who help maintain your competitive edge?
Personal financial security
During the recession, and in the intervening years, many business owners limited contributions to their own compensation and personal retirement plans. Improvements in the economy and your company's finances may signal it's time catch up on compensation and benefits you sacrificed in recent years.
Earlier, we addressed the need for a business continuation plan in the event you die or become permanently disabled while running the company. A similar business succession plan can help you move toward your eventual retirement with assurance that plans for your company's future, complements your personal aspirations, and supports your family's well-being.
Through your business succession plan, you can address pertinent questions such as: Will you want to pass your company on to members of your family, your management team or perhaps all your employees as a group? Do you plan to continue to own all or a stake in the company or cease ownership? Do you plan to exit it outright, perhaps taking it public, selling it or dividing it into smaller entities?
Your accountant, attorney, banker, financial planner and insurance professionals will work with you to develop comprehensive strategies that will protect your business, your family and yourself.
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