Survival of the Family Business

Survival of the Family Business

Is your business ready for tragedy at the top?

I was driving home from a client meeting last Thursday when I received some awful news: my uncle, James Lennard, had unexpectedly passed away. He had worked on the farm the majority of his life and even in his retirement was still found on a tractor helping out with fall tillage. He was a big influence in my life and is a person who will be greatly missed.

Your action plan should be clearly laid out so it's there when you need it.

It's common in any farm magazine to read about tips for succession planning on farms and the transitioning of management over several years. With the recent passing, I can't help but wonder if farms are prepared if the unexpected happens tomorrow with an owner or senior leader. It's difficult enough to deal with the loss, let alone make business decisions that impact the future of the company during that grieving time.

How will the business quickly adapt and function successfully with the sudden gap in leadership? Who will replace the lost decision maker? Is that one individual or two? If it is a single owner and the spouse is not actively involved, what steps is he or she to take? Who should he or she turn to?

Action plan

In order for the business to continue successfully, an action plan must be in place to manage through the crisis of a disability or passing of leadership. The plan should be reviewed at least once a year and communicated with all those included in the plan.

It's not comfortable to talk about such unexpected tragedies, but in looking at keeping the business for future generations, it's a must have.

There are several items to consider. Should there be a team put in place to manage the business until the role is replaced? This team could be made up of internal and external individuals who come together to make decisions in the interim. Insurance policies are also a way to relieve financial burden and stress on the business. Consider a life insurance policy to cover a portion of the debt and disability insurance in the event one of the family members is unable to contribute physically or mentally, but still needs income.

Besides the bigger picture decisions, how will the business perform daily transactions? Standard operating procedures ensure anyone can jump in any role at any time. All roles from accounts payable to management should have them in place. Passwords to all accounts should be kept where at least one other person knows how to access them. I keep all my passwords on a protected excel worksheet and one other person knows the password to that worksheet. Ensure all accounts have at least two individuals who can access and manage the account, such as bank accounts, cell phones, credit cards, etc.

At your next managers meeting, I encourage you to bring up the discussion and start taking steps to prepare.

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