Continuity plans are a passion of mine.
My speeches often revolve around how to make companies stand the test of time. I want successful private business owners to be able (if they want) to transition that wealth and value to their families and loved ones. And one thing is clear: If something happens to you the business owner, don’t expect your spouse to step in to fill your shoes.
You need a more robust plan. Each of us has unique things we do well and things we do differently. What one spouse brings to the table usually is not the same as the other spouse. Therefore, expect a skill gap if a spouse has to take over for the business owner.
The plan must designate someone to step in to be an executive and take control in the owner’s absence. While the business owner may have been very comfortable in that role, the other spouse who may have been in the background may prefer not to take on the responsibility.
We need plans that will do more. That means we typically establish a broader management structure such as a board of directors or officers to provide checks and balances, and clear continuity for the business. Otherwise, employees may not be willing to stick around, and much of the value of the business may be lost.
This goes beyond just having an estate plan to transfer ownership interests from one spouse to the other, or from a spouse to children. It is also about having a strong, comprehensive management structure to help the business continue. Having the spouse involved in the business in some ancillary role is usually not going to be enough to get the business where it wants to get.
What’s your experience with this? Have you seen businesses exposed to this risk? How have they dealt with it? Join us in the comments below and let us know your thoughts and experience.
Make sure you download our free checklist to assess your business.
This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique. Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. Freeimages.com/photographer Kerbstone.
About the Author
R. Shawn McBride is the Chief Innovation Officer at McBride For Business, LLC. His signature keynote, The 3 Laws of Empowerment, gives audiences an entertaining look at how they can prepare, plan and protect themselves. You can email R. Shawn McBride or (214) 418-0258.
Check us out on the web.
Add us on Twitter: @McBrideForBus #McbrideForBusiness #3LawsofEmpowerment
Like us on Facebook.