Life Can Turn On a Dime: Are You Prepared?

 In Financial Planning, Strategic Planning, Succession Planning

Submitted by Steve Southern, Ogilvie Daugherty Business Profit Solutions

What would happen to your company if you became incapacitated?

I could toss in some statistics here but that seems like an obvious move. Chances are you have read similar statistics many times before. Life and disability insurance companies have all of these same numbers down to a science, literally. They know, quite precisely, the likelihood of you becoming unable to work within the next year for a duration of three months, or six months, or longer, or much longer. More accurately, they know the likelihood for someone in your particular demographic.

The dry nature of statistics neuters their intended effect – to jar you into action. So what happens when we get a little more personal? We all know someone who has become incapacitated, whether temporarily or permanently, in the blink of an eye. By “incapacitated” in this context I mean that he/she was completely unable to work. We all have a related story we could share. It may have happened to a friend of a friend, or perhaps a friend, or family member, or that lady in your golf league, or that guy you used to see at soccer games, but we all know someone.

If we limit the conversation to temporary or permanent incapacitation, I could relate a story about a business partner. I could mention a cousin or several other family members. I could instead turn to a guy with whom I used to play hockey. I could fill this page and countless more with all of these stories. I could note that they were all simply going about their daily lives, just as you are right this moment, and how the next moment for them, in their story, their life changed dramatically. That fellow hockey player used to get the best of me in front of our net. Life turns on a dime.

And yet few of us ever consider that it just might happen to us.

Getting back to my original question, what would happen to your company if you became incapacitated? For argument’s sake, let us focus on a six month period of absolutely no work. What would your company look like after those six months passed with your shadow having never crossed the threshold?

Everywhere we turn these days we see media stories about business succession and how to maximize the value of your business. They tell us that the value of a business takes a hit when the business relies on the owner. This of course makes sense. The current owner will not be involved post-sale (barring some sort of performance clause).

This concept of reliance though is not simply about business value. You could get hit by a bus tomorrow, or today! Will your company even survive?

Of equal importance, do you need your company to survive? Are you financially independent or do you need the income, or the portion of your wealth currently wrapped up in your company? And what of your employees, and partners, and customers, and suppliers? What does your shareholder agreement say on this matter? Is there a trigger clause of some sort? Is your shareholder agreement funded? Do you have powers of attorney in place?

I realize I have shared more questions than answers. The questions serve you much better than any generic answers that I could provide in this context. Your situation is absolutely unique. I cannot provide the answers you require in this generic article. But I can provide some thought-provoking questions and hopefully stimulate some activity.

This entire topic forms a small portion of the much larger area of business and personal contingency planning. As noted above, the concept of enhancing and protecting business value also plays a role. As the owner of the business, you should really be somewhat irrelevant to its daily functioning. Everyone in the business should be, to some large extent, expendable. And that includes you!

I leave you now with two tasks. First, begin the long process of making yourself irrelevant and expendable. The business will no longer be exposed to your potential for incapacitation, and the value of your business will increase substantially (assuming profitability and other factors remain unchanged). And as you make yourself increasingly irrelevant, dedicate some of your newfound freedom to develop or enhance your entire business and personal contingency plan. In doing so, reference many of the questions above while you also work with the best advisors you can find.

Hopefully soon your answer to the question that opened this article will be that your business will continue functioning perfectly.

For more information please contact Steve Southern directly via 519-588-5251 or

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