Business survival is something which should not be left to chance. Most business owners are totally geared up to running their business and assume that everything will be OK if anything happens to them. They are usually wrong.
There are two aspects to ensuring that your business survives.
- Planning for when things go wrong with you. Will the business be able to continue?
- Succession planning so that the boss can one day hope to retire but still have a business with some value (and keep the staff in jobs!)
Few people start a business purely to earn income, intending to close it if they can’t work any more. Instead, they want to create an asset for their family, a pension income for themselves and security for their staff.
Business survival strategies are vital and they only work if they are planned well in advance.
Lets say the boss has a stroke. Or a car accident.
Who can sign cheques and run the bank account (or pay your wages)?
In most cases the bank account will be frozen until the bank is convinced they have recovered, or someone else has the necessary authority. The Taxman won’t wait, neither will the other creditors – staff wages, mortgage company, freeholder, council tax, phones. It doesn’t take long for it all to come tumbling down.
And pretty much the same will apply in your personal life too.
If the boss – or one of them – dies – who will inherit?
If it is a partnership, usually the partnership will automatically be closed down, leaving the surviving partners trying to re-form the business with new bank accounts, leases etc. Unless there is an up to date Partnership Agreement to deal with these issues, the Partnership Act applies.
If it is a sole owner, then their Will will decide who inherits the business, failing which it will be the relevant family member/s under the Rules of Intestacy. An emergency Court Order will be needed to allow the executors to continue trading (and does the Will appoint executors who understand the business?)
If it is a limited company or limited partnership, are the necessary agreements in place? Will the new owners be right or just drain the company for income whilst contributing little or nothing. Would it be better to have a right for a suitable person to buy the shares so the widower or widow gets cash and not a business they have no interest in? Are there any tax saving opportunities?
Why not work with us to give your business the best chance of surviving/ Business survival benefits you, your family and your staff too?