A business cannot work or start without having an owner or manager taking charge and working towards reaching all business objectives.
At times it can be a one-man show as a sole proprietor, and at other times, it can be a team of leaders deciding what they will be doing and how it will affect the people beneath them.
Nonetheless, death is inevitable. So, what happens if the owner or one of the leaders dies? Of course, it is a grim thing to even think about. But, it is a point that has to get discussed at one point or another. The faster a succession plan is in place, the better it will be, especially if you’re the company’s employee. So, ask and hope your company has such a plan in place.
Let us look at what you can expect from a company when the owner or a leader dies suddenly.
Planning For Life of Your Business After An Unforeseen Death
First, we will look at death from a personal viewpoint. Imagine you have a business or own a part of a business. You could be running it on your own or with the help of the people you have partnered up with.
Nevertheless, it depends on you to ensure that every business base or area gets covered and thought about, including anyone’s unexpected death. It might not be the most fun or spectacular point to concentrate on or make decisions for. However, it gets argued as the most important area.
Making Suitable Arrangements
“Succession planning” is the formal term for death planning in the business world. This planning does not only consist of life insurance and creating a will. It also includes leaving an action plan for your business and your team for when you are gone.
As a business owner, you can start your succession plan by choosing from one of the two options you have. The first option is to sell the business completely and give shares to the employees, partners, and family members a part of the share. Secondly, you can decide to keep the business and name someone a successor, where you decide who will take on your responsibilities and place once you’re gone.
The one you choose to be the successor should get told beforehand as it will give them a chance to take your place without a problem and keep the business moving forward with the vision you had. Most of the time successor is either a family member or a C-level team member who is ready to take on any responsibility.
No matter what you choose to do, you have to make it all official. By making it official, it means you do not tell the CEO to sell your business or your son that he will be the next CEO.
You set everything in writing. You write what you want to get done after you are gone and sign it at the end. Once you do that, get in touch with an attorney to ensure everything is legit, and you have all the proper business arrangements in place. Remember, if you have a board of business partners or advisors, let them know and consult them beforehand.
What Happens If There is No Plan in Place?
A lot of the time, business owners trust that their business partners will do their business justice; and do not see any reason for creating a succession plan. Look at the whole situation from another viewpoint. When you die, you would want someone in place to pick pieces up straight away, but people mourning your death will not be able to think straight.
Definitely, your partner would like to honor any last wishes you had, but how can they do that if they have no idea what they are? Not to forget the fact without having a plan in place to keep your business thriving, you are basically throwing all your hard work away.
The most vital point is, anything can happen if you are gone without a plan in place.
Your family could decide to sell it, or your business partner could take over, leaving nothing for your family to rely on financially, or you back could try to take over by claiming assets and so on.
In simpler wording, your business is at risk and goes into flames without your way. It would be worth your time to plan something to have the success and all the hard work you have done, preserved.
How to Deal a Business Owner’s Death?
You might not be a business owner; you might be a COO or a CEO or have a small share as one person amongst the partners. No matter what your position might be, if you happen to be a leader of a company, you might be expected to step up your game and take over if an owner dies suddenly.
Partners and Investors
If one of your business partners dies unexpectedly and does not have a succession plan, then other partners, including you, can choose from a few options. You can buy and take over their position and shares, or you can sell it to their heirs or select an heir.
When you choose to buy and take over the shares of your partner, you also take over the responsibilities they had. You handle everything they did, or you employ someone else for that position.
The option of selling their shares to their heirs, means you give the deceased’s family a price they can pay to keep the share and position the deceased had. It is a complicated situation, causing more issues and heartbreaks rather than resolving the difficult situation at hand.
You can always opt to appoint an heir, meaning you invite the partner’s sons or daughter to fill the role they had at the company. No shares get sold, or funds get distributed, making everyone happy and satisfied. However, the heir should have experience and the knowledge to keep up with the new position they have to take over.
Employers
Think about the situation we mentioned before about you, as a business owner, not having a plan in place for sudden death.
Let us imagine, you’re an employee at a business, where the owner suddenly dies, without a plan in place. Their family decided to sell the business. The person who they sell it to can make any changes they want, including letting the previous employees go, including you. The situation would mean, you go from having an amazing job to nothing in a matter of seconds because of the owner’s unseen death.
You do not only lose a valuable leader, but you also lose the job you love doing. If you have management or a top-level position to yours, enquire about succession planning, bring it up; it’s an important subject!
Final Thoughts
A business owner should know how to take positions in various roles within the company. As a business owner, one day, you might be making a financial plan, and the next, you might be looking and signing off marketing campaigns.
Nonetheless, the most complicated position one might get put in is when the business owner dies suddenly. You should ensure your business goes in good hands and you plan everything with your partners and lawyers. If you’re an employee, discuss with your business owner about their succession plan. Better to be safe than sorry.