An unfortunate fate for many small businesses is the sudden closing after the owner unexpectedly passes away. The absence of a solid business succession plan dooms many small business. A recent Forbes article titled, “Will you Go Down With Your Business?” lists a few questions that business owners should ask themselves:
- If I were to walk away from my business today, could it continue to function without a major disruption to profit?
- Am I prepared to transfer my business to a successor of my choosing?
- If I sold my business today, could my family live off the profit?
The answers to these questions should help determine the longevity of a business. It is important to realize that in order for a business to have transferable value, it must be able to function without the owner. This means that the business must have a competent management team and committed employees who will not jump ship in the absence of the owner.
Depending on the business, one possible option may be to obtain life insurance to fill the income gap if the owner were to suddenly die. Also, a business plan should be developed so that employees can wrap up the business after your passing. A qualified elder law attorney can help devise a business succession plan as part of a comprehensive estate plan.