When you’re a passionate entrepreneur who has dedicated massive amounts of time into your company, you usually expect for years, decades or centuries even, of growth and prosperity.
Not only do you want the company to grow, you expect to grow with it. Some founding Executives go as far as to placing clauses in their charter documents to ensure that they will always have voting rights or to ensure that they accrue enough shares in the company that will always secure their ownership.
While our businesses become akin to bloodline relatives, we must realize that there may come a time when it can be at risk of depletion. Circumstances such as health, accidents and other traumatic events can cause a founder to depart from the business, and subsequently, the business falters. Additionally, factors can affect the business directly, such as financial disputes or illicit accusations.
Fortunately, in either case, there are measures that can be taken to reduce the risk of the business becoming completely defunct. The key to prevention is first being open and honest about all possible threats to the company’s livelihood. Second, you must take the time to plan for the worst.
Here are a few steps to plan ahead before calamities, whether it be through threats to the business or the absence of the leader.
Have a healthy savings account
In emergency matters, every business should have money set aside in an account separate from the general operating account. Much like our personal lives, when we unexpectedly need to pay for car repairs or medical fees, not having the money can lead to uncompromising situations.
And there is a good chance that with financial matters in business, the amount of money you spend will be much more than you spend on personal expenses. Even if you’re a small business, having “petty cash” set aside is better than nothing.
Just remember to use the money for actual emergency situations, not for buying a new coffee machine for the office.
In line with having a savings account, it is always a good option to have insurance coverage that caters to the type of business that you run. Even if you go years without using it, it’s better to be safe than sorry, especially when coverage is needed that’s bigger than your savings account.
Moreover, when recruiting employees and volunteers, a great selling point is that they will not be liable if the company is sued or threatened in any way.
Have a right hand man
Every great leader has a protégée. This person is someone who has the potential to move into a dominant role in the company if needed. They must be trustworthy, and most importantly, knowledgeable of the ins and outs of the business.
When you find that person who is instinctually a good fit for the Executive role, plus has a proven track record of consistency in moving the company forward, you should nurture them. In a case when you, the top Executive, has to be out of commission, you will be relieved to know that the company is in good hands.
Create a Succession Plan
A succession plan is an extension of having a “right hand man.” It involves ensuring that your entire core team is aware of the current state of the business, as well as, future plans for years to come. These individuals may currently be in leadership roles or have the potential to fill positions given their experience and how it aligns with the opportunity.
It is also imperative that this plan is in writing. One way to do this is continuously revamping the company’s business plan. If your business plan happens to be a 100-page anthology, taking key information and creating a 3-year strategic plan every few years will work as well. Be sure to include all vital information for accounts, partners, contracts, clients, etc. that fuel the business.
As an entrepreneur, you always want to be sure that the business is taken care of, for better or for worse.
Imagine retrieved from http://blog.startupprofessionals.com/2011_10_01_archive.html