In business, as in life, there are no guarantees. Many entrepreneurs have put their blood, sweat, and tears into building a successful company, only to come crashing down due to unforeseen circumstances. Some even lose their businesses due to health problems or death.
While it’s impossible to foresee everything that could potentially go wrong, there are steps you can take to ensure that your business will continue to thrive, even when you’re not around. Here are some tips to help you make sure your business will always be in good hands.
1. Have a succession plan in place.
One of the best ways to ensure that your business will continue to thrive in your absence is to have a succession plan. This plan will outline who will take over the company if you can no longer do so. It should also include instructions on how they should proceed and what steps they should take to keep the business running smoothly.
An easy way to do this is by designating a successor in your will. This person will be responsible for taking over the business and ensuring that it continues to run according to your wishes.
You can also do this by putting your business in a trust. A trust is a legal entity that can hold assets on behalf of another person. You can use this arrangement to protect your business from creditors or lawsuits if something happens to you. You can appoint a trustee to oversee the trust and ensure that the company is being run according to your wishes.
A trust attorney can help you set up this type of arrangement. They can also help you decide who the best person is to serve as the trustee of your trust.
2. Make sure your business is adequately insured.
Another way to protect your business in case of death or disability is to ensure it is adequately insured. There are various insurance policies you can purchase that will provide coverage if something happens to you.
Business owners’ most important insurance policies are life insurance, disability insurance, and health insurance.
Life insurance will provide a death benefit to your family or business in the event of your death. You can use this to help keep the business afloat while your successors are getting things up and running.
Disability insurance will provide you with an income if you cannot work due to an injury or illness. This can help you stay afloat financially while you’re unable to work.
Health insurance will help pay for your medical bills if you become sick or injured. Depending on the policy, it may also provide coverage for things like prescription drugs and rehabilitative care.
3. Have key employees sign non-compete agreements.
Your employees are one of your most valuable assets. They are the ones who keep the business running on a day-to-day basis. It’s important to have key employees sign non-compete agreements to help protect your business if something happens to you.
A non-compete agreement is a legally binding contract prohibiting an employee from leaving your company to work for a competitor. This can help prevent your employees from taking your customers or clients with them if they decide to go.
You can use non-compete agreements to protect your business in case of death or disability. You can also use them to protect your business if you decide to sell it or retire. When drafting a non-compete agreement, it’s crucial to have an attorney review it to make sure it is legally binding.
4. Have solid contracts in place.
You can also protect your business by having solid contracts with your customers, clients, and vendors. These contracts should outline the terms of your relationship and what will happen if one of the parties cannot fulfill their obligations.
For example, if you have a contract with a vendor, the contract should outline what will happen if the vendor cannot deliver the goods or services you’ve contracted for. This can help you avoid costly delays or disruptions in your business.
It’s also important to have contracts with your customers and clients. These contracts should outline what will happen if you cannot fulfill your obligations. This can help you avoid losing customers or having to refund their money.
5. Make sure your business is appropriately structured.
Finally, you can protect your business by ensuring it is appropriately structured. How your business is organized can significantly impact how it is taxed, managed, and inherited.
For example, if you have a sole proprietorship, your business will be taxed as part of your personal income tax return. This can be a disadvantage if you have a high income. On the other hand, if you have a corporation, your business will be taxed as a separate entity. This can be an advantage if you have a high income.
These are just a few of the ways you can protect your business. Taking these steps can help ensure that your business will thrive, even if something happens to you. Always consult an attorney or accountant to get professional advice on how to best protect your business.