It seems like every other week there’s another story of a multimillion-dollar family business that falls apart shortly after the current owner steps down or passes away. This sheds light on an ugly truth. Most family businesses are woefully unprepared for the existing owner to depart, especially if it’s unexpected, as is the case with an unforeseen illness, injury, or death.
The question is, why do so many otherwise exemplary business operations fail when the current boss is no longer in the picture? Like many other things in life, it often comes down to a lack of planning. In this case, it’s a failure to put in place an effective estate plan, including a comprehensive business succession plan, to ensure your company will survive no matter what happens to you.
What’s even more sad is that this lack of planning is often due to nothing more than hollow excuses. Indeed, there are endless reasons why you might put off estate planning, but in the end, none of them matter. Here are 3 of the most common excuses for failing to put a plan in place. Do any of these sound familiar to you
If you own a family business—or any type of business for that matter—it can be a real struggle just to get all of your most-pressing daily tasks done on time. This is especially true in today’s fast-paced, 24/7 business environment. You move from one task, one meeting, one email, one phone call, one text, one fire to put out to the next, and before you know it, a year has passed by.
This lack of downtime precludes many types of forward-thinking business planning, particularly estate and succession planning, which require deep introspective strategizing and can take many months, even years, to fully develop. And even if you do schedule a time to create a plan, unexpected matters—onsite accidents, lawsuits, audits, illnesses—often pop up that demand your urgent attention, and planning gets pushed back yet again.
The fact is, estate planning is a big-picture, long-term process that lends itself to procrastination by its very nature, so a lot of business owners never get around to it. That said, should you fall seriously ill or unexpectedly pass away, a lack of a plan can become a tragedy for both your business and family.
To avoid such needless hardship, you must treat estate planning like any other critical business project and invest sufficient time, money, and energy to get it done right. After all, what project is more important than the future success of your business and family?
While estate planning and business succession planning are matters that you should take the lead on, they ultimately require input and action from family and key nonfamily team members. To this end, if you come up with a first draft of a plan, present it to your team, and they don’t seem interested or resist your ideas, it’s easy to get discouraged.
In the end, there’s a good chance you won’t be around for the trainwreck that’s likely to happen without a plan in place, so why should you bother if nobody else cares? However, you’re the boss for a reason, and you need to act like one now.
You must motivate everyone in your family and on your team who would be affected by your death or incapacity to treat planning with the respect it deserves. Of course, you’ll likely encounter some pushback, but as with any essential mission, you must keep your eye on the ball and do whatever it takes to ensure your business and family can survive and thrive if something should happen to you.
A lack of clear understanding about any serious undertaking frequently leads to fear of failure, and in turn, procrastination. Nobody, especially the boss, wants others to think they don’t know what they’re doing. This is but one more all-too-common reason entrepreneurs never get around to estate planning.
That said, when it comes to estate and succession planning, it can be difficult to even identify clear goals for a future that doesn’t involve you. This is just natural. If planning were simply another operations’ issue that needed solving, you’d have a plan in place in no time flat. However, multi-generational planning is by default something you’re almost certainly unfamiliar with.
Indeed, business strategies that worked for your grandfather and father might not have worked for you. And by the same token, what worked for you may not work for coming generations. This can make it feel impossible to even know where to start with your plan, much less identify what problems might arise and how to address them. But start you must.
This is where experienced family business lawyers like us come in. We can guide and support you to create a comprehensive estate plan to ensure the company and wealth you’ve worked so hard to build will last for generations to come. In particular, this includes putting in place a long-term business succession plan that not only names your successor, but also provides a detailed roadmap for him or her to follow when you’re no longer around to offer your wisdom and advice.
If you’re guilty of using any of these excuses for not creating an estate and succession plan, it’s time to get real. Such planning is every bit—if not far more—as essential to your company (and family’s) continued survival and success as any other business issue you can face. So if you’ve yet to put a comprehensive estate plan in place, consult with us today to take care of this vital responsibility.
And even if you have a plan in place already, you should have us review it to make sure you’ve actually covered all your bases. Taking either of these actions will not only help shield your company and family from unforeseen tragedy, but also give you the peace of mind needed to really take your business to the next level. Schedule an appointment today to get started.
We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.