“The longer you’re not taking action the more money you’re losing.”
Kimberly has been running her info-marketing business for 15 years now. She’s supported her family and saved a nice nest-egg. A scary bout with a heart problem sent Kimberly scurrying to develop a succession plan.
“I realized no one even knew my passwords. If I died, all my information would be locked up on my computer!” Kimberly said. “Entrepreneur succession planning for me would be a roadmap for my family and heirs to follow if I became disabled or died. And a plan for me when I get to thinking about retirement.”
Shared corporate knowledge
First Kimberly took time to write down much of what was only in her mind. As the entrepreneur and creator of her business, so much was intuition and her own personal experience.
“I gathered together asset statements, bank accounts, partners, vendors, and all their contact information.”
She listed debts, repayment schedules, and plans for faster payoffs if needed. She made a folder and put life insurance papers, incorporation paperwork, and trust documents there.
Entrepreneur Succession Planning
“What would happen to my business if I couldn’t run it? Who could? What did they need to know?” Kimberly asked the tough questions. “I really didn’t want to think about all this. After all, I’d been healthy up to now. But I realized I wasn’t invincible.”
Fortunately Kimberly had an older child who was at college, but had shown interest in the business. “Because much of the work is online, he could do some things from college.”
Kimberly was surprised at what her son, Tim, knew about the business… and what he didn’t know. She set in place a plan to get Tim up to speed on every part of the business.
She also started working with her part-time employee, Lisa, to get her trained in every aspect of her business. “I wanted a back-up person who could take over in a pinch,” Kimberly said.
The Inheritance Plan
Even though Tim might take over the running of the business, Kimberly wanted her other two children to have their share of the business.
She called a family meeting to discuss who wanted to be involved in the business and how to divide the assets of her company.
As an entrepreneur, she’d never even had the value of her company assessed. “I had a figure in my mind, but the appraisal came in much higher,” Kimberly said. The other two children wanted the money but not the headaches of the work.
For Kimberly, the best solution was to create a company with shares. Each family member would inherit shares of the company. Tim would receive a salary and the shareholders a distribution.
This would allow Tim the chance to buy out his siblings over time if he wanted.
Feeling More Secure
“I never thought I’d be grateful for a heart attack,” Kimberly said. “But now I feel so much more secure and in control of the future of my company.”
Entrepreneur succession planning may look different than succession plans of other kinds of businesses. But it’s just as essential.
With her business organized and replacements in the wings, Kimberly feels more comfortable about the future. “It’s done,” she says. “Now I can focus on what I love— helping people succeed using my great products.”
If you’re an entrepreneur or solo-preneur who wants the confidence that comes from an effective succession plan, contact Joel for help.