Just as you protect your loved ones with life insurance or a will, you need to protect the business you've established and the workers who depend on you. Learn how to create a plan that will keep everything running smoothly when you or your partner can't be there.
By John Mulligan
In 1993, Richard Laermer, president and founder of RLM public relations and author of Punk Marketing, came down with a prolonged case of the flu and was unable to work for more than three weeks. At that time, his firm was a sole proprietorship with only a few employees. While he was out, most of the business was put on hold and one client decided to leave the company. According to Laermer, the client was amazed that there was no one at the company to cover for him during his absence. “That’s when I got really nervous about what that means to not have anything in place,” he says.
Laermer warns that when you have a small business—especially one with your name in the title—it is easy to think, and have your customers think, that the business revolves around you. “That’s dangerous,” he says. What happens if you’re not there? Illness and injury arise unexpectedly, and there may come a time when you are unable to fulfill your duties running the company for an extended period. It is important to prepare your business in advance should an emergency ever happen.
Write Things Down
The first step in preparing your business to withstand your absence is to develop a written contingency plan. “Most business owner’s PDAs are in their brains,” says Nate Sachs, founder of Blueprints for Tomorrow, a business advisory firm headquartered in Scottsdale, Ariz. “Business owners don’t write these things down. There should be a written contingency agreement, so that if anything happens, if I’m disabled, if I’m incapacitated, here’s how it’s supposed to look.”
Betsy Fein, president and founder of Clutterbusters!!, a Rockville, Md.-based company that helps individuals and small businesses become more organized, agrees. Having a written manual filled with all of the information necessary for the business to operate is essential, she says.
“You may know where everything is, but God forbid, something happens or you get called away and someone has to take over, how are they going to know where everything is?” asks Fein.
The manual should include instructions on logging into your computer, passwords, and the names and locations of important files. Additionally, Fein suggests you make a log of your daily routines and responsibilities so whoever is filling in for you has a clear picture of what needs to be done and on what timeframe. “Basically think about everything someone should know and then put it in a three-ring binder,” she says.
It is also important to have key contact information readily available. Depending on how long you are away or how unreachable you are, your employees may need to know how to reach people important to the business whom they may not be used to contacting, such as the accountant, banker or attorney.
Have a Replacement Ready
Along with developing a written contingency plan with instructions on how to run the business in your absence, you need to determine who would be the one to follow those instructions and actually run the business. Is there one person who can assume all of your responsibilities or would you rather they be spread among a few different people?
Marika Flatt, founder and president of PR by the Book, LLC in Round Rock, Texas, says, for her company it works better to split up the extra work. She prefers to assign the different tasks required to run the company according to the strengths of her employees. “You do not want people taking over duties they are not qualified for,” she says. For example, her husband will run the day-to-day operations of the business, but she has experienced publicists on staff better suited to assume the creative and editorial aspects of her job. She also feels it helps to spread work around so that one person is not overloaded.
If you do divvy your duties among people currently on staff, make sure these separations of responsibility are clearly outlined in your manual or written contingency plan. Whether it’s financial decisions, administration, or day-to-day operations, it is important that everyone understands who needs to perform which tasks and who makes final decisions in each area.
Flatt does admit that having one person take over can be a more streamlined way to handle business while you’re gone. If you have one person such as a partner or top assistant already very familiar with the management of the business, that is often ideal. However, if someone like that is not on staff, it is natural for a small business owner to turn to a spouse or family member for help managing the business in emergency situations. Sachs suggests that if you go this route, it could be beneficial to appoint an employee or even a trusted peer or acquaintance in the industry to serve as a mentor to the person taking over in your absence.
Structure the Business to Run Without You
The best way to ensure that your business is able to survive without you is to run it in a way that is not dependent upon you while you are available. “The company should always be structured as a stand-alone company,” Sachs says. “That means this company can function with or without the owner being there.”
Sachs often tells the business owners who consult him to write down an entire list of all their duties, and to identify the two or three things that they do that no one else in the company can do as well. He then tells them to consider all of their duties that could be performed just as effectively by someone else, and set a goal each quarter to make one of those items someone else’s responsibility. If you are only responsible for the things that you alone can do, that will leave less of a void if you are temporarily incapacitated.
Sachs also believes it is important that you empower your employees to be able to act without you if necessary. He has a list of the 20 most important relationships to his business, whether those are clients, vendors or business advisors, and he says, “It is my constant goal to have my managing people know those 20 people as well as I do.” This way, if he ever is unreachable for any period of time, his employees have a relationship and a level of trust with the people it will be most important for them to work with in his absence.