Time sure flies when you're stuck at home staring out the window. Or at least I think that is the saying. What I had hoped was going to be a very busy and productive weekend with our friends in Washington DC, turned out to be well, not so productive. More info on that below.
Contingency Planning
Many businesses are very good at planning for all sorts of scenarios. Markets up, markets down, expansion, growth, focus, etc. However few businesses are very good at contingency planning. And I completely get it. It is an energy drain for most people to have to think about what can go wrong for them personally and how that might affect their family, their business, their employees, on and on. But being a responsible owner means facing these unpleasant tasks.
The simple reality is that your business is likely to fail without your leadership. If ownership transition for the business is uncertain, business continuity is seriously threatened. The balance of power, particularly in a closely held business, can be very fragile. The loss of the company leader can leave a void that results in power struggles, employee turnover, managerial mistakes, lost customers, and lost profits.
Enter the Contingency Plan. As noted in earlier messages, Contingency Planning focuses on individuals, and in particular your key people at the top (including yourself). The goal of a contingency plan is to predetermine who is responsible for what before it is necessary. In other words, we want to do this without the emotion of the moment, and while you are able to direct what should happen.
Again, focusing your own death and disability is not a fun topic. But I can speak for all your family members and business associates: it is a very important topic we want you to address before something happens. Since we're already in planning mode anyway, now is the perfect time.
The activity isn’t hard, but the thought process can be a bit exhausting. Here are the simple questions you need to answer/document. (You MUST document this!! If you are lying unconscious in a hospital bed, no one will be able to ask what you want to do…)
- Management: Please note this is separate from ‘ownership’. Who would you like to see run the business if the CEO and/or President are unable to for an extended period of time? Who should be:
o CEO/President
o CFO/senior finance/accounting decision maker
o Sales leader
o Operations leader
- Compensation: how would you like to compensate each of the individuals noted above for stepping into the increased roles? Increased salary, bonus at the end, etc.
- Dispose/sell the business vs. continuation of operations: Do you have a preference of whether to sell the business, keep operating the business, or some other idea? It is helpful to those making those decisions without your input to have some guidance as to your preferences and guidance.
o Who are a few groups/individuals (that could be buyers) you think should be contacted in the event it is determined the business should be sold/liquidated?
o What is your primary goal you have in mind for suggesting either selling or continuing to operate? (Ex – provide local jobs, retirement for family members, income stream for family members, family legacy, industry support, want the business to keep the family name, etc.)
- Advisors: Is there a key advisor or two that everyone should be aware of to assist if a key executive is not around? (Ex – should they look to Brian for guidance on selling the business or interim executive management?) Is there a mentor that you have shared intimate details/concerns that would be able to get the team up to speed quickly?
The Latest on Stimulus Packages
Long story short, nothing has really changed since the last email. There is another vote that is supposed to come today – I’m keeping fingers crossed.
It is worth noting however that there are some major things that will address decision-making for virtually everybody who receives this letter. I do not want to speculate as to what will be in the final stimulus plan, but I am advising folks to hold off on any major decisions until we see what is passed. As an example, as recently as this weekend there were competing plans for small businesses to either a) receive incentive compensation to keep employees on, or b) change unemployment insurance to give employees several months at 100% pay. Obviously those two options would set a business owner on dramatically different decision paths.