Business Continuity Planning: Are You Leaving a Legacy or a Liability?
This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.
As a business owner, you work hard every day to create a successful business that can provide for you and your family, create jobs for those in the community and give back to those who have helped you through the years — but simply creating a great business isn't enough. In order to truly be successful, you need to think beyond the current generation and consider what will happen when you are no longer at the helm.
No matter what the nature of your business, you are either creating a legacy or a liability for those who will come after you. Just consider what would happen if you were forced to retire tomorrow by a health problem or a sudden disability. Would your business be able to go on even without your input and constant supervision? Could your management team and your employees pick up where you left off and continue to serve your existing customer base and even gain new customers?
If so, you have created a lasting legacy that will be there long after you have left the picture. You can be proud of what you have created, and you can be sure that your children and grandchildren can carry on the legacy you started. They will enjoy the financial security you struggled so hard to build, or they will be able sell it to an investor or a larger company and negotiate from a position of strength rather than desperation.
Now consider the opposite scenario. If you were suddenly unable to go into the office and run your business, would the firm soon begin to falter and lose its most important customers? If so, your business isn't an asset to those who will inherit its operations. Instead, you have created a liability, one that others will need to deal with in your absence.
There's a saying in business: "Never make yourself irreplaceable. If you're irreplaceable, you're unpromotable." This is as true for the business owner as for any employee seeking to advance their career. If you're irreplaceable, then not only will your business not survive your retirement, but you will be chained to your business as an employee should you ever decide to sell it.
Turn a Liability into a Lasting Legacy
Fortunately, it's never too late to turn that potential liability into a lasting legacy for yourself and your family. With the right business continuity planning, you can transform what was once a liability into an asset that your family can rely on, not just tomorrow but for generations to come.
One of the biggest problems many business owners have is trying to do everything on their own. When you started your business, chances are you had to wear many hats. You might have been the person who answered the phone, the guy who fixed the computers, and the chief salesman in addition to the president and chief operating officer. Even today, you might do many jobs.
Knowing how to do every job in the business might be important to you, but it can be a liability in terms of business continuity. If you have a trusted protégé you plan to pass the business on to, now is the time to start teaching that person the ropes, from which suppliers to use to how to get the best price on printer repairs. Teaching your expected successor all aspects of the business is a critical part of business continuity planning and one of the best ways to transform a potential liability into a successful legacy.
Formal Planning
Formal continuity planning is just as important, no matter what the nature of the business. If you already have a retirement plan in place, share it with your family and others whom you expect to have a major role in the business going forward. If you plan to turn the business over to your children, make sure they have a strong desire to take over for you. Your family members might have other plans in mind, and that could throw your future planning for a loop. Finding out ahead of time can help you make alternate plans and prevent your lasting legacy from falling apart.
Once you know who will be taking over the business, it's important to put a tentative timeline in place. You might not know the exact date you plan to retire, but chances are you have at least a vague idea of how much longer you want to work. Start planning for the future now, and work with those who will be taking over to make sure they are ready to make the transition. You can make things easier and help to secure your legacy by staying on as a mentor and consultant after your retirement. That type of continuity can make the transition easier and help to ensure that your customers do not experience any disruption in service as the business is passed from one set of hands to another.
In many ways, creating a lasting legacy you can hand down to future generations is even harder than starting and running a successful business. Planning for the future is never easy, but having a firm plan in place before you need it will make it a lot easier for those who will be picking up the business when you retire and enjoy the financial security you have worked so hard to create.
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