Running a business is a very involved process, and can take most of your attention on a day-to-day basis. You may not even have thought about what would happen if you suddenly became incapacitated to the point you couldn’t run your business for a period of time – or permanently.
What if, for example, you suddenly became seriously ill and had to hand over control of your business to someone else with only a moment’s notice?
This is by no means a pleasant scenario to think about, but it’s important that you do. You need to have a plan in place in case you need someone to step in and run things for you, either temporarily or permanently – a business continuity plan.
Why You Need a Business Continuity Plan
- To ensure continuity of ownership
If you should suddenly be unable to run your business, you need a business continuity plan in place to make sure there will be a smooth transition to a new owner with as little disruption as possible.
Your business continuity planning should include having a Business Will and stakeholder protections in place so that your wishes will be carried out and unnecessary tax implications mitigated.
A smooth transition isn’t going to be an easy process in any event, but it’s going to be even more difficult if you don’t have a strategy in place. This is especially important if you have family members involved in your business and/or have multiple shareholders.
- To ensure continuity of operations
A continuity of operations plan is also important to ensure that your employees and your business are protected as much as possible. If you became incapacitated, who would take over? Who would make the important decisions about day-to-day operations, or communicate with your employees? Who can access key systems and documents as necessary?
One of the ways to ensure this happens is to create a detailed operations manual that you’ll then share with those you’ll expect to take over in your absence.
- To leave accurate instructions for the next owner
Obviously, as part of your legacy, you want your business to reflect you and the future you want for it. Therefore, your business continuity plan should include explicit instructions for the next owner that detail what you want to happen. Should the future owner sell, or keep the company? What are the most important factors for the new owner to consider first?
Each of these three elements will also need to be re-evaluated on a regular basis to make sure they are still accurate.
Revisit it whenever any changes occur so you can rest assured that everything is up-to-date and your wishes will still be carried out in the event you can no longer be in charge.