How can I prepare for an emergency succession?

| Dec 22, 2020 | Business Succession Planning | 0 comments

You have probably composed a long term plan for someone to succeed you as the owner or manager of your business. Unfortunately, not all business owners enjoy a smooth transition into retirement. A sudden event like an accident may deprive you of the ability to carry out your duties.

If you are temporarily or permanently unable to run your business, someone will have to take over for you sooner than you had planned. Entrepreneur explains how you as a business owner may plan for possible emergency changes of leadership of your company.

Create an emergency plan

When you are preparing to go on an extended trip that takes you away from your business, you should consider meeting with your personnel to come up with an emergency plan. It can address vital business functions that need to continue in your absence, such as designating individuals to handle the payroll, make invoices, order inventory, and overall take charge of the company while you are gone.

Your plan may address how you want things to run while you are away, or you may compose a longer term plan that goes into effect if you cannot get back from your trip due to an unforeseen event or if you suffer injuries from an accident and need time to recover before you can return to work.

Set up a power of attorney

An auto accident or an illness may be severe enough to disable you, perhaps robbing you of the ability to make financial and business decisions. To prepare for this event, consider creating a power of attorney document so that someone you trust can take over and make important decisions on your behalf.

Also plan for a way you to exit your company if an emergency compels you to leave your operation. For instance, a buyout provision can dictate who can buy your ownership interest and at what value. This could take a lot of the burden off your power of attorney to make decisions concerning your company if you have an exit plan already in place.