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We can all agree that love is a good thing. I expect that you love your spouse and your family—at least, most of the time. I also expect that you probably don’t love your employees in the same way. But if they’ve worked for you for a long time and helped you build a business that has fed your family over the years, you must at least like and respect them. They’ve played an important role in your life.

As such, it’s important to think of your employees the same way you’d think about someone you love. Responsible parents take steps to care for their loved ones in the event that something happens to them, by taking out life insurance, for example. But have you taken steps to ensure that your employees are also cared for if the unthinkable happens to you?

Imagine today is your day.

There are lots of ways to go: a heart attack, cancer, an accident. Yes, it’s uncomfortable to think about. I’m reminded of a famous quote by a man on his deathbed: “I know that everyone dies at some point, but I always thought I might be the exception!” I think he articulated what a lot of us are thinking: that is, “It won’t happen to me!”

It probably won’t happen to you any time soon. But it’s imperative to take the responsible route and make some plans for your business in the event that you’re suddenly unavailable to do so. There’s absolutely no downside to doing so. In fact, putting things in order will benefit you now, and everyone else later.

Let’s start with the logistics. Should something happen to you, who will your spouse call first in your company to let them know what has happened? Once they get over the initial shock, what will your employees do? Who will be in charge? Have you written that down somewhere?

Externally, does your family know what to do with your business? Will your customers continue to want to work with your company? Will suppliers still send product and give credit? Will your bank call your loans?

These are all questions that will someday have to be answered—and ideally, not while people are stricken with shock and grief. Here are a few steps you can take to keep your business from falling apart should you suddenly be removed from it:

  • Update your insurance portfolio to provide the company with cash in the event of your premature death or disability. Money will be required to pay off debts that you personally guaranteed, to replace you or the person who will step into your shoes and to pay taxes, legal fees, accounting fees and numerous miscellaneous expenses associated with transferring ownership and control to someone else. Without the right amount of insurance, your company could be crippled by the double whammy of losing you as the leader (and perhaps the top salesperson) and incurring significant costs related to your death.
  • If you haven’t already started, get working on your transition plan. Make yourself redundant. Hire good people and train them to be responsible. Mentor your successor and build the strength of the team.
  • Consider implementing an Employee Share Ownership Plan (ESOP)If you have a strong team of people, a good way of making them capable of running the business without you is to get them thinking like owners. An ESOP can do this. ESOPs also tend to reduce expenses, increase sales and reward faithful employees. In addition, in purely pragmatic terms, an ESOP creates a vehicle to get your money out of the business in a tax-efficient manner while avoiding broker fees (which can amount to 10% of your company’s value). Essentially, an ESOP increases the likelihood that your business—and your legacy—will continue, and be sustainable over time.
  • Put your wishes in writing. Some lawyers suggest entrepreneurs create two wills: one personal, and one for the business. Ask your lawyer if that makes sense in your situation.

I realize this stuff isn’t fun to plan. But think of it this way: Imagine one of your kids delivering your eulogy. What will he or she say? This:

“Dad was a great guy. Not only did he run a good business over the years, he also took responsibility and put plans into place to assure that the business would continue. He took care of his family and his employees. In fact he did such a good job planning this, over the past few years the business pretty much ran itself, while still providing him and Mom with an income.”

Or this:

“Dad was a great guy, but…”

Which legacy would you prefer?

Wayne Vanwyck is the founder of The Achievement Centre International in London, Ont. He is the creator of The Business Transition Coach Forum and the author of the best-selling books, Pure Sellingand The Business Transition Crisis. He has been training and coaching business owners for the past 30 years.

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