When I am asked about my exit plan, I respond firmly, “TOES UP!” Now that is not the entire story; in reality it depends upon who is asking. (We get inundated with cold calls about this topic, especially here in Florida.) Regardless of where you live and do business, you need an exit plan. I don’t care if you are a business owner or an employee or an independent contractor, you need an exit plan. Unfortunately, it appears that most don’t, according to a recent Identity Marketing poll, which showed that over 66 percent of the respondents said they do not.
I will limit my advice to the business aspects. I am not here to discuss detailed estate planning, although that is a serious component of your exit plan. And a well conceived will is critical to any overall plan. But let’s stick to the business for the moment.
Owners: What happens when you leave? And leaving can be voluntary, such as retirement, or suddenly, such as death or disability. Who will run your company in your absence? Will customers stay on in your absence? How will the company be funded in your absence? These are all serious considerations that you cannot take lightly.
Have you documented your intentions/instructions? Can your company operate without missing a beat?
I refer you to my previous column regarding a business plan. If you do not have a good plan in place, you are doing a disservice to your heirs and employees. In order to maximize the value of the business, there must be a great – not good – plan in place. Left on their own, employees and customers will drift off without you.
Do you have a strong management team? How have you trained your staff? Do you ever try to have the business run in your absence? For example, it is a good idea to treat vacations like permanent departures. Can the company function in your absence? Are there procedures in place and records accessible to keep the engine running at full speed? Are your email communications accessible to appropriate staff? Have you empowered your employees to make decisions within their authority? And have you given them sufficient authority? You may take your daily decisions for granted your daily decisions, but without you, the company needs to carry on. You would be surprised at the decisions that may be made (or not) in your absence.
What about your vendors? Will they continue to be paid timely? They are also an integral part of your company’s success. (As an aside, two of GEMPIRE’s largest credit losses were a result of the death of the principal without a strong plan or team in place. In one instance, a son gave up his career to make it work, and he failed. As a result he lost not only his father and possibly an inheritance, he also lost his old job.)
Remember, it is imperative to protect one of your greatest personal financial investments. You are doing it for your family and co-workers – and your customers.
Here at GEMPIRE I have a COO and I have empowered all of my employees within their specific job responsibilities. I travel extensively on behalf of the company, so there may be days when I am not readily accessible. The employees must be able to function independently during those periods.
I also have personal life insurance for the benefit of GEMPIRE. It will alleviate any immediate financial issues if I pass on suddenly and unexpectedly. What do you have in place?
Employees and independent contractors: Again, what happens when you leave? Maybe you do not care, but from a professional standpoint, you should. Your customers and family members deserve better. What about your co-workers? They have gone to battle both for you and with you many times. Will you leave them “naked?”
Here are some of the steps you should consider:
1) If you use password protected documents, who has access to those passwords? How can someone retrieve your work or that of your employees?
2) How are your current projects handled? If you were hit by a car today, can a co-worker step in your shoes? When our employees go on vacation, we try to treat it as if they are gone. Can we handle any and all of the situations without the employee. Of course, that requires a vacation memo, which is akin to an exit plan regarding workload!
There is a lot more to this topic. Things such as estate and professional planning, family involvement in the future activities are two that come to mind immediately. Sometimes a little knowledge is dangerous, but you need to consider this subject seriously. There is no greater “what if” scenario to consider.
After graduating from the Wharton School at the University of Pennsylvania, Harvey Mackler enjoyed a 20-plus year career in commercial banking, exercising his “golden parachute” in 1996. He was executive vice president and COO of a commercial finance subsidiary in Manhattan and chairman of the Small Business Banking Unit of the American Banker’s Association. He has served on the board of the acclaimed George Street Playhouse in New Jersey and chair of the Easter Seal Society of New Jersey for two years, as well as a captain on his local emergency rescue squad. He acquired GWI Corp in February, 1997 and transformed it to focus on the supplier/distributor/end-user model, growing the company's sales by 500 percent. He is past chair of the SAAGNY Foundation, current Co-Chair of the PPAF EXPO and past Chair of the Supplier Committee of PPAI.