By: Patrick Ungashick
One day every business owner will exit from his or her business. Most owners want to control this process, and make sure the exit is good for employees, customers, their family, and themselves. Having a plan to do this is called an exit plan.
However, if there is one exit planning topic consistently overlooked, it is risk management. Good planning needs to address those "what if" scenarios. The following two-and-half minute video explains how risk management needs to be part of your planning. I have also included at the end of this letter, one of the risk management tools we use with our business owner clients to get you started.
One of the simplest and most effective risk management tools, is an Emergency Guidance Letter. This is your way to let business partners and /or top employees know what to do if something should happen to you and you are unable to tell them yourself. We rarely meet owners who have this letter prepared, yet if something happens, it can be as important as any insurance policy.
To draft your letter, use the following template and consult with your advisors. Remember that you cannot anticipate every scenario or issue - provide broad guidelines and trust in your top employees and advisors to do the right things.
Drafting and keeping current a letter which answers these questions could literally save your business if something happened to you. You've worked too hard not to consider this simple but effective tool.