Now, imagine Frank’s family... Frank’s wife, Jenny, was half-way to finishing her nursing degree, something she’d always wanted to do. She had never worked in Frank’s business.
Frank was essentially the manager of the store they owned. Frank’s salespeople were good salespeople, but have never had to manage employees, phone in payroll, manage the books, pay/file sales tax, manage cash flow. As a matter of fact, nobody knew where the loan paperwork was for the two outstanding loans Frank had. Frank managed a profitable store, but organization was never a strong suit.
Monday, Frank’s spouse can’t grieve or even take care of their three kids, a two-, seven- and 10-year-old. She must figure out the business.
Luckily, she knew her husband’s password to his phone, and could view his contacts to call his CPA. Unfortunately, she didn’t know he fired him 8 months ago and hired a new firm, but she had no idea who he hired. Her only option is to log into the company’s banking website and begin tracking down check stubs, bank statements and try to do some investigation to figure out everything.
It’s not impossible, but is this really what she should be doing right now? Frank always knew he should put together a will and increase his life insurance, but he was always putting out fires at the store and never got around to it.
Take action, now
I’m sad to say that this could happen to any of us, at any time. In January, a great man and friend passed away and left a similar scenario for his family. He loved them so much and worked hard to ensure they had a great life but hadn’t taken the time to prepare.
Hopefully, this story will encourage you to take action, so your family doesn’t have to go through hell after you ascend into heaven.
First, how well are you insured? Typically, you should set aside enough to pay off your house, pay for your children’s estimated college expenses and replace your income for five years.
Another type of insurance you should consider is long term disability (LTD). Some owners put their income into their company’s Workers Comp policy. However, with LTD and health insurance, you’ll have better coverage which won’t just cover you in the event of an accident at work but will cover you for any type of debilitating illness or accident, and it will be less expensive without the same state mandated income limit restrictions.
Be prepared
In addition to getting your insurance right, you should go through the steps necessary to ensure your business and your family is prepared. Although I cannot create a list specific to your exact situation, the below steps should at least cover most of the larger concerns.
1. Store emergency procedures manual — This book will help in so many ways, not just in the event of a loss of life but also when you lose power, internet, have a flood, tornado, or any other emergency situation that may occur especially when you are out of the store.
It should list all of the vendors, contacts, and their phone and account numbers. Include things like garage claim insurance companies, your POS IT department, credit card machine, internet, phone or VOIP providers, etc. This way, when something goes down and you are in Mexico on a dealer trip, the store doesn’t have to take you off the beach!
It should also include a section for manual/paper invoices, and the procedures on how to calculate tax and process credit card payments in the event of a power loss or POS issue.
Don’t forget to include a major equipment list and who to call for service in the event of a failure.
If you have ever had a major insurance claim, one of the things they will ask you is whether you have an emergency procedures manual.
2. Password/web account list — First, let me say this, for security, do not store this on the cloud. But somewhere, you should have a password list that your spouse, business partner or other employee can get to in the event of an emergency.
This should be updated anytime a password changes and stored on your computer under a non-conspicuous file name such as “Interesting stuff” that only you and your spouse know. Your spouse should do the same on their computer, using the same file name so you don’t have to remember what the other one called it.
3. A business continuity plan — This should be at home for your spouse and list things like your daily, weekly, monthly and annual tasks, and when things are due to be completed.
Keep in mind the level of knowledge your spouse has of the business, and write the procedure based on their level of knowledge. What do you check on Mondays? What are your benchmarks? When do you phone in payroll? How do you calculate payroll/bonuses/commissions? When do you renew your insurance? Who do you get back-end monies from? What are the terms of those agreements? What loans are outstanding and what is the contact information? Who is your lawyer? Your CPA? Insurance agent? What are your partnership agreements? Do you have someone in mind who could help your spouse manage the business or guide him/her when questions arise?
Let me take a quick side note here to mention that if you have partners in your business, you might want to consider having the company purchase insurance on each partner that would buy-out the spouse in the event of a partners’ death. You’ve agreed to go into business with your partner, but did you agree to go into business with your partner’s family? Your partnership agreement should be amended to lay out the details of a buy-out.
4. A will — Even if you are married, the transfer of a business is a big deal, and you don’t want it going through the courts. A clear, professionally drawn will can save tremendous headaches for your spouse. The last thing you want is it going through probate and if your spouse does need to shut down the business, having unpaid vendors making claims against your assets. Better to keep it clear and separate, and if necessary, let your spouse file bankruptcy on behalf of the business. Be sure to also list out on a separate sheet of paper all your bank/financial/retirement accounts, life insurance policies, and notate where any monies may be hidden like the false wall behind a drawer or buried in the yard 15 paces from the oak tree.
5. Planning your final wishes — Don’t delay the hard conversation of what the plans are in the event one or both of you pass away. This is such a tremendous hardship on spouses who have put this off, because psychologically at this time, it is naturally difficult to make decisions.
This is a very comprehensive list and sounds daunting. If you break down the things necessary, you should be able to get all these things done in one productive day. I don’t necessarily suggest that, rather devote an hour a day to different tasks and ask your spouse to hold you accountable to get it done over a two-week period. It is just the kind of push we all need. Delegate what you can to your staff by assigning certain parts of the store emergency procedures manual to your teammates.
Once everything is complete, one copy of the emergency procedures manual should be in the store and an additional copy should be kept in a safety deposit box, including any electronic versions on a thumb drive. Annually, go through all the documents and update anything that has changed. Just think how many of these items have changed in your life over the last year.
Now take a deep breath of relief in knowing that you have done everything in your power to ensure your family will have one less thing to worry about. Who knows, maybe by relieving that stress, you will keep the tragedy from occurring for a very, very long time. ■
