Does a business need an ‘Estate Plan’? Well, will it end? Not necessarily. Will the owner’s involvement in the business end? Yes, necessarily. A Business Contingency Plan (BCP) is an important business tool to address the simple but extremely impactful reality: that the management/owner of the business will not show up one day.
A quick Google search will tell you that BCP is “a strategy for how your organization will respond to important or business-critical events that knock your original plans off track”. The contingency plan protects resources, minimizes customer inconvenience, and identifies key staff, assigning specific responsibilities in the context of the recovery.
I will put it like this: a BCP helps you to clarify what you want for the end of your business and/or the interruption to your business if you cannot show up one day. The risk that you do not show up is always present. A BCP minimizes the consequences of that inevitable event including the emotional toll on you, your team and family. Best of all, a BCP makes for a stronger business because of the focus of direction and clarity of purpose.
Elements of a BCP
I will summarize the key features of a BCP. It is not an exhaustive, finite list – there will always be more detail to add. These are the basics and as you work on the plan over the years, more elements will be revealed.
- Unifying Objective Statement: This is the answer to the question “what do I want to happen to the business if I don’t show up?”. This statement provides your team and family with your documented wishes, direction, and purpose. This can change over time. You’re planning for right now. The answer will be different if “ever again” or “temporarily” is added to the question. Prepare both.
- Information Access and Recovery: When you don’t show up, how can your computer, calendar, CRM, contacts, systems, files be accessed? Who can your family/team contact for help? Who is responsible for accessing these assets and tools?
- Financial Access and Maintenance: When you don’t show up, how can your bookkeeping, bank information, accounts, payables/receivables, assets, liabilities, income, and expenses be accessed? Where are the insurance policies located? What can we expect for an influx of money? Who can your family/team contact for help? Who is responsible for accessing these financial assets?
- Communication Plan: When you don’t show up, what do you want communicated to your team, your clients, your suppliers, your industry partners and advisors? Who is going to make the communication? How will they know what to say?
- Ending the Business: When you don’t show up, how does your team/family know what to do with the business? (see Unifying Objective Statement). What happens to the Team? Can it be sold? Wound-down? Who does your family/team contact for help? Are there any coaches, industry colleagues or advisors that can help in this objective?
- Important Contacts: Maintain a list of industry colleagues/partners, coaches, legal, accounting, bookkeeping, financial, tax, and insurance advisors.
Again, these elements are not exhaustive, and your business may benefit from unique elements. With the right time and effort devoted to your Plan, you will develop a personalized Business Contingency Plan that meets the needs of your business. It’s important to note that a BCP is never finished. Businesses change over time, and your BCP should reflect those changes to support your business’ transition in your absence. The best way to accomplish this is to work on your BCP a little bit every year, so it becomes an incorporated element of your business planning.
With the right BCP, you can support your team/family with a well-conceived and easy-to-follow plan in your absence.