These are often discussed as separate topics, but I really believe disaster planning and succession are very much intertwined. Business owners and management need to have plans in place to cover a wide array of situations:
Interruption of business (i.e., bad weather, loss of power, supply chain problems, loss of major customers etc.). Sudden illness of a key employee, owner or manager. Death. Sale of the business. Transfer of leadership to the next generation. All of these are situations that create major problems but they can be managed with some planning. I highly recommend a written plan, and the more your business grows, the more critical this becomes.
“Run your business every day like it’s for sale.”
In my work providing consulting services, as well as my professional speaking engagements (conducting focus groups, business team building, motivational speaking), I tell owners and managers: “Run your business every day like it’s for sale.” Believe it or not, I’ve had clients contact me after listening to my advice to tell me they actually have had a buyer walk through the door and offer to buy their company.
What does that advice involve? Well, think of what you did the last time you sold your house. Remember all those nit-picky little things that never got done? Some landscaping, some painting, a door that was sticking… they all got fixed before you put the place up for sale! Then you wondered why you didn’t do them all sooner and enjoy your home longer!
Make a Business Plan
There are key essentials that only a business owner can do, or at the least hire someone such as me to do it for them. Two of them are a business plan and a marketing plan. These are your first lines of defense for dealing with changes in your business. An absolute must. If you don’t have them, contact me and I can help.
Insurance Coverage
In conjunction with your insurance broker, your accountant, and your attorney, you should have a comprehensive range of insurance coverage that will cover you adequately for most losses that may occur. I’m not an advocate of over-insuring, but I also don’t believe you should stay unprotected.
Job Descriptions
Your company should have written job descriptions for every position. Owners and managers glaze over (the “Krispy Kreme” look) when I tell them this. No one likes to deal with job descriptions. I excel at them. If you can’t get this done, hire me. I’ll show you a simple solution, get them all written, and teach you how to use them routinely to make your business function better.
Review and Use Financials
With your accountant, learn how to review your financials. If you’re like most owners, you get your monthly P&L, look at the bottom line to see if you made money last month, then you shove it in your drawer. It is a TOOL, and you can be using it to learn the “story” of your business. Again, I can help you learn how to spend a short amount of time each month to examine critical areas of your finances, and how to use your monthly P&L as a planning guide for future business performance.
Make an Owner’s Manual
In my seminars, I recommend having an “Owner’s Manual” in which you address all of these items. Again, this is something that takes time to set up. Once it is in place you will wonder how you ever operated without it. It gives you monthly reminders of every task you need to care for as an owner, and allows you to delegate certain things to get them done. The result is things don’t get overlooked, and you can sleep at night.
One of the components of the owner’s manual is reminders for maintenance. If your business depends on critical equipment, regular maintenance is essential. In disaster planning, preventing a disaster is much more desirable than trying to fix it after it happens.
You must envision the major areas where things can go wrong, as I mentioned earlier in this article. Each one of those things should have a written plan of action to follow in the event of an occurrence that could affect your business operation. If you become incapacitated or die, your spouse, children and key employees will be left without direction if you have not put a disaster plan/succession plan in place.
One complaint I hear in my seminars is business owners have children who have no interest in the business. As a result, the owner hangs on way too long, hoping that one of the children will one day step up and take the reins. Your succession planning should address the eventual sale of your business, whether it’s to an outside party or your employees.
Let’s be honest. Many owners find ways to “skim” money from their business. It may amount to substantial sums. They often do it thinking they are avoiding taxes. Here’s the reality, and it’s critical for succession planning: Your business is worth a multiple of either total revenue, gross profit or net profit. Skimming may save you $10,000 in taxes while robbing your business of hundreds of thousands in its eventual value when you sell it.
As you can see, this topic is a critical one for business owners if they are to have a business that succeeds and eventually returns to them a handsome reward.
Have you ever heard the story “Can You Sleep On A Windy Night?” It’s the story of a farmer who was meticulous about caring for his farm. The barn was tight and solid. The farmer’s maintained his equipment well, and stored it properly. His crops were harvested timely and stored properly. His animals were cared for impeccably, always checked for health, put safely away at night. When asked why he did all these things, he said, “It’s so I can sleep on a windy night. When I go to bed and I hear the wind blowing outside, I can rest easy because I know everything is safe.”
Be that farmer.