As a subset of Exit Planning, every business should have a written contingency plan in place should something happen to the owner(s) of the business, whether it be disability or death. It is important that the business have the cash flow that it needs to continue and the family of the owner(s) continue to receive necessary funding.
There are many issues to consider in Business Contingency Planning, including:
- Written instructions on who should run the business and how decisions will be made
- Written instructions on whether the business should be sold and who should receive proceeds
- How communications will be handled with all stakeholders of the business
- Whether or not “stay” bonuses should be provided to keep key employees with the company
- Setting up appropriate life insurance policies
- Setting up disability insurance, funded or self-funded with payments to the company or the family
- Creating Shareholder Buy-Sell Agreements
- Emergency action plans
- List of key advisors
- List of possible buyers