Avoiding Unexpected Business Closure: Five Quick and Easy Steps for Business Succession Planning
With small-to-medium sized San Diego businesses, an unexpected tragedy or personal accident can put the business in danger. The key person is often busy running the business and is not always careful to neatly file and document what is going on, what sales have been made, what deadlines are pending, what bills/invoices need to be sent, and all the other aspects of success. No business owner wants his or her business to close down because of something unexpected. Thus, it is important to take some time to put together a business succession plan. This is done for short-term and long-term planning for the future. There is a happy middle-ground; no succession planning can be fatal to the business, but too much succession planning is a distraction and likely unnecessary since some eventualities may never materialize. Here is a quick rundown on five quick and easy steps to take. An experienced San Diego corporation attorney can help.
- Identify the successor (or at least the person who will find the successor)
The most important aspect of business succession is to identify the successor or, if that person is unknown at the moment, then identify the person or persons who will choose the successor. Think of this person or persons as your succession agent/s. The key here is that your successor or your agent is going to be a repository of information.
- Start providing information
After the successor or agent is identified, give that person general information about the key aspects of your business and where to find important information. Let us say you are not a meticulous record-keeper — maybe all the business receipts are in a box on the table behind your desk. That is fine, of course, but your successor needs to know about the box of receipts. Likewise, let your successor know where the financial accounts are, how many there are, etc. With customers, make sure your successor knows who the main clients are, where you keep their files/information, how to contact them if a succession event occurs, and more. Make sure your successor has this information for everything important for keeping the business running including suppliers, landlord, lenders, and the like.
- Start making a list of access information
So much of business is now online including routine matters like monthly payments for utilities and other services. As such, there is probably a long list of internet accounts and each account will have a username and passcode. It is important to take some time to list out those accounts, along with the usernames and passcodes and put all that information in one place. Again, importantly, tell your successor or agent where that information is located. Often, you can add the financial and other accounts here, too.
- Involve other members of the team
A good business will have professionals as part of the team. Those might be accountants for the tax returns and employee withholdings; maybe lawyers for contract drafting and review; maybe real estate professionals or other industry experts. Take a few minutes to talk with members of your team about who the successor or agent is in the event of something unforeseen. On the flip-side, identify the members of the team and their contact information for your successor.
- Enlist your clients/customers
Finally, take a few moments to enlist your customers and clients in the continued success of your business. At minimum, mention that there is a succession plan in place and who your successor or agent will be. Or, if time and circumstances permit, actually introduce your successor or agent to key clients. This is needed particularly with long-term clients and customers. It is probably useful to do this with key suppliers, too.
Contact San Diego Corporate Law
If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses. Mr. Leonard can be reached at (858) 483-9200 or via email.