Readiness Analysis

Business Continuity and Contingency Plan

What happens if?

Transition planning addresses both a voluntary exit and an involuntary exit from the business. Most business owners have some form of insurance in place to provide for their family members in the event of death or disability. All too often, this is considered the contingency plan for “what happens if I go missing?”

If your exit strategy gets derailed by changes in circumstance, what’s the plan? More importantly, who is going to step up to stabilize your company until an appropriate buyer is to be found, or who is going to make the decision to continue operating the business as is?

Most importantly, your financial circumstances are likely to be dramatically different in this scenario. The Company may be less saleable or transferable without you being available to help with the transition of management and ownership.

Addressing the “What Happens If” circumstance is a necessary component of the business transition planning process. There are actually several items which must be considered in order to ensure that the business and family member needs are all attended to, if you are not around to manage this process. Your succession planning should always address various contingencies in conjunction with your Preferred Exit Option.

You have indicated that some important items were completed to-date, but those that were indicated below and/or those that were excluded, might need to be revisited:

• Shareholders agreement
• Life insurance with spouse/family as ultimate beneficiaries
• Power of Attorney
• Disability insurance

There are also other agreements and areas of responsibility you may need to consider as part of your contingency plan. Important areas should be reviewed and assessed again as your succession plan is completed, in order to ensure that the contingency plan is aligned with your overall succession objectives.

A letter to someone whom you trust should be considered, discussing the business details if you are not around; whom you should trust and whom you shouldn’t, who should run the company, and where to find important documents or passwords, to name but a few. This document may or may not be available, or opened, until you deem it necessary. An attorney or someone of trust (not in the business), should be aware of and have authorized access to the letter when the information contained is needed. Lastly, this letter should be reviewed and updated regularly.