No, I’m not going to write about what you may need to do to save your soul from fire and brimstone. I’m also not going to be writing about the Mayan’s belief that the world will end today. But you must admit that it is a catchy title for a blog. However, I will write about preparing for the end of your business life. While every business owner is aware that the day may come when they mentally or physically are unable to direct the activities of their company they are also aware that the day may come where they will want to reap the fruits of their labors and retire. Who will be there to take on the very important job of running the company the business owner has spent their whole life building?
Do you have a succession plan? If not, now before there is a need for one you better start thinking about who will succeed you and under what conditions that succession will occur. For some business owner’s succession is easy as they operate a family run business with children actively involved in the day-to-day operations. Usually there is one of two of these family members being groomed to take on the owner’s duties if and when the need arises. In other cases there are partners in the business, each with their own role but who could easily assume the duties of other partners if unexpected events left the position unoccupied. For other owner’s however there may no
family members interested in the business or partners able to absorb responsibilities. What occurs if the owner has no succession plan? Does the business falter and possibly fail? Will income to the owner’s family be reduced or cease completely? Without a succession plan to direct the outcome decisions for the business could be delayed or not made at all.
A succession plan can be many things but the most basic elements should be those that help provide assets to support the directives that are in place and steps to enact those directives. In the case of the business owner with no one available to take over management the succession plan should include key man insurance with both life insurance and disability insurance policies covering the owner. The funds from these policies can be used as directed to either support the owner’s family or provide assets necessary to hire outside management for a period of time until decisions can be made on the final disposition of the business.
Succession plans can also be a business owner actively pursuing a younger partner to assume ownership and responsibility for the business over time. In essence, it is truly an exit strategy for the current business owner. While I personally have key man policies as part of my company’s succession plan I would prefer to choose the person who will run my company when I’m no longer capable or interested in doing so. I’ve look for several years for the right
person and have yet to find them, so my advice to other business owner’s is to start the search early if this will be part of your strategy.
If the world ends today are you prepared? Do you have a strategy?
CEO, Employing Broker
Katchen Company, founded in 1962, is an integrated real estate company with its corporate headquarters in Lakewood, Colorado. The company offers real estate development, redevelopment, property management, brokerage, consulting services, construction oversight and maintenance services to individual and institutional real estate investors throughout the greater Denver metropolitan area in Denver with satellite offices in Chicago, Las Vegas
and Miami market areas.