John and I recently have updated our wills and trust now that our children are grown and don’t require guardianship if something happens to us. At the same time, we had to update our plan for what happens to the business since we are sole owners of the corporate documents.
We have key man insurance, personal life insurance, and all the safety nets in place to make payroll but are currently working on what the operational leadership would be, ensuring that the business model can run with or without us. To clearly define who takes the helm in our permanent absence, we have had to contemplate the following questions. Who will we choose? Is it multiple people? What is their relationship to one another? Do they want the responsibility of ownership? Are they qualified to take the lead at the company for sustainable growth? How is the business settled in the estate for our heirs? Have we eliminated potential litigation?
Contractors have additional factors to be covered that we do not have with a consulting firm. We hear every week of construction companies going out of business due to an unforeseen accident, partners illness or death, a key man leaving and taking key personnel with him or her and of course, way too often we hear dissolution due to divorce. The end does not need to be your death. The end is always due to a severed relationship personal or business and can be your choice or not.
A seventy-six, year old, owner of a business he founded thirty years ago recently decided he wanted out. His clock was ticking, and he wanted to do something else with his last days. He built a successful business and employed fifty people who he treated well both professionally and financially. No regrets on his end that we can see. The market is good, and most of the fifty were able to get new jobs right away. The key personnel were offered to buy the company, but even if they came up with the several million dollars to buy the company, there is the issue of cash flow, bonding line and all the costs associated with maintaining the business. Three of these key people were officers of the company, but did not own stock and were not tied to the financials.
A few years back one of the top multi-family builders had to close a twenty -year business due to the financials were tied to a family member of one of the owners that went through a divorce. Another construction company was backed by an investment company that decided to stabilize their portfolio risk by getting out of the building industry. The managing executives on the corporate documents for both of these companies were all out quickly with their contacts, knowledge and paid to date just like their employees.
On the flip side, another client that is third generation contractor forced to rebuild the company twice in the one- hundred -year history is stronger today than ever. They intentionally make sure their leadership is not only trained but understands and accepts the responsibility of their role and how their choices make a difference to more than just them as individuals. They are also grateful that the one- hundred- year history survived.
Ask yourself these three questions:
Do you have accountability?
Whether you are an employee or employer, having someone that will ask you tough questions and someone you can reach out to for reliable advice can make or break your career and business stability.
Do you know who and how you would be replaced in business if something were to happen to you tomorrow either causing a temporary or permanent absence?
Employer or employee, intentionally having a succession plan in place prevents not only demonstrates your self-confidence to others, but it also helps others to secure their futures and provide for their families.
Do I have the financial safety nets in place?
For employers, this includes insurances and those that can financially keep the company sustainable in your absence especially if the work you do requires bonds and cash flow for materials, equipment, and payroll. For employees what is your backup plan besides just getting another job? If you have been part of a company that you have helped build for many years, you may not bring the same value out of the gate or ever to the next company.
“Individual commitment to a group effort – that’s what makes a team work, a company work, a society work, a civilization work.” Vince Lombardi
Does your commitment to your company include planning for the end? It’s always a sad day when we hear of those that didn’t plan for the end. Starting over is so much more comfortable with resources and a plan.
We are always available to talk if you need someone. The end is inevitable.
Suzanne Breistol on behalf of the FLCC Team!