Tag: buy sell agreement

Anatomy of a small business continuity plan

The US is built on small business, and for good reason. Owner/managers get control over their destinies, gain the freedom to create, and have the chance for significant upside if the business is sold. Often, small businesses have partners, multiple owner operators who share the responsibilities of management – in the trials, and tribulations, that go along with that duty.

Life happens. And so does death. But what happens to the small business if one of these partners, a critical part for making the engine run, passes away? There is no way to compensate for the emotional devastation, but we’re not here to discuss hiring family therapists. The owner/operator now departed has an estate, and with it (hopefully) heirs. Those heirs are generally entitled to the partner’s share of the business. Unfortunately, those heirs may attempt to assert their rights beyond ownership, inserting themselves into an organization that they do not understand. It’s not always bad, but it can be – disruption to the business from getting them up to speed on what is going on, dealing with the immediate injection of diverging ideas, and sometimes demands to generate a liquidity event so the heirs can go do something else. This issue can be avoided if the business has a plan.

There are two ways in particular a small, thriving business can protect itself in the event one owner/operator dies. The first is to make sure resources are available to find and train a suitable replacement; the second is to ensure that heirs to the deceased partner’s estate are compensated in accordance with the deceased’s wishes. And both of these needs depend on the value of the individual partner’s contribution to the firm, and the value of the firm itself.


Winding up the month of July

The next couple of weeks are going to be fun…

  • Alex Landeen hits Colorado today. We’re going to be fishing like madmen, and probably drinking with similar fury. Scouts were sent out to check conditions, and the report back was good-to-go. Some of the Primal Fly gang are going to be in on the mayhem.
  • Going to hack together an internal RSS parser, as subcontractor to a real engineer. It’ll be a novel use of RSS, and I can’t believe that knowing a little PHP actually led to doing some coding on the side for real compensation. I find coding fun, but don’t think I’d want to do it full time – the entire internet would crash and burn if I did.
  • I’m hitting the carp water the first of next week with someone who needs convincing that they should compete in the Carp Slam. I consider it a done deal already.
  • Over the next few weeks I’ll be reviewing the buy-sell agreement for small business client. They’re concerned that either the agreement is weak or that the amount of insurance they have doesn’t fit the bill for the business size. Valuation may be in order, and since the entity itself is light on hard assets, I’ll probably be playing the discounted cash flow game.
  • By month’s end I hope to have the operating plan done for a direct sales plus lead generation concept. It’s in the green energy space, and the crew we’re assembling is A #1 top notch. Creating a sales and marketing organization from the ground up – entity, people, technology – means my hands get very dirty. I like that a lot.
  • And it may leak into August, but I’ll be tearing to pieces reviewing two pieces of fly fishing gear, an overlooked pair of rubber soled wading boots and a waist pack by someone with big name recognition. This means I’ll have to do some fishing, and while it is beginning to feel like work that in and of itself may be the best excuse ever.
  • Adieu.