Client meeting
In a meeting with a prospect, all things were going well until the COO asked me an important question: "If something happens to you, what happens to our benefits strategy? Who steps in and supports our program as designed?"
I am sure many of us have stories of clients, family members, and friends whose career goals were affected by a disability or death. I have known for my entire career that I needed a detailed succession plan, and until that moment, it lived in a box labeled "problems for future me."
Turns out I am not alone. Seven in 10 owner-operated businesses fail or sell at distressed value when the owner dies without a plan. Less than 30% of small business owners have anything in writing. Not only will this help you, but you can also start these conversations with your clients. Use it as a way to support your centers of influence: attorneys, accountants, and financial planners.
After a deep dive into how my accounts would fare if I died tomorrow (spoiler: not well), I was a little ashamed I had waited this long. The asset I have worked hard to build could lose significant value without a proper plan. I could no longer put off planning for preserving my business and ensuring continuity for my employees and clients.
It is easy to feel overwhelmed about where to begin. Everything we do requires a password and two-factor authentication. Start with the foundation: establish a trust for your business and appoint a qualified trustee (preferably licensed) to help keep the basics running, like payroll and operations. Having the business purchase a buy-sell policy on your life is also an easy step. But there are other things to consider.
Your trustee can be a family member, though I would not recommend it unless they want to take over your business. In Idaho, the Department of Insurance will grant your trustee a temporary insurance license for 30 days to ensure time to pass the insurance exam and get appointed with all the carriers.
Through my deep dive, many colleagues told me their spouses would take over the business. My husband is an engineer. He enjoys working with robots, creating widgets, and clutches for motorcycles. He has no interest in taking over my business, nor do my son or stepkids. So, I had to identify a potential buyer and create a framework for that transition, including introducing them to clients over time so they are familiar with each other. Family seems like a great idea, but we must consider that they will be navigating grief if you die or ongoing medical treatment if you are disabled.
This is a critical step. Your operations should be well organized and documented, from your standard operating procedures to a detailed CRM. Too much information about all the steps in your business is not a thing. This will minimize disruptions in processing client concerns and implementations.
In addition to that, you will want to have your support staff sign NDAs and non-solicitation agreements. Make sure they are aware of the "in case of emergency" plan to provide them reassurance and keep them from panicking and seeking new employment. This documentation is also incredibly valuable to your heirs in a sale of your business.
You also need to consider what happens with the agents you have employed. If they have a buyout provision in their contracts, how will that be executed? If they don't how will you enforce non-solicitation agreements, NDA's and non-compete agreements
Some of you have multiple assets of value in your business. From networks to contracts with providers and have customers for those businesses. You will want to consider how these will be managed. Would you sell these assets or have someone specific take over running those programs? How will your estate be compensated?
These are just a few things to consider as you plan. I have found myself writing down all kinds of small nuances that needed to be documented.
Have a little fun with it and make a "Dateline Binder." That will provide your trustee with the details of each account, the passwords necessary, and two-factor authenticators. Include the potential buyers for the business, life insurance policies, and banking information. If the old school binder feels a little too Gen X there are some great tools online that will help you build out your one place for important documents for your successors.
Of course, a magazine article can't provide every step of your planning process; these are a few ideas for consideration as you build out your succession plan. Take it one step at a time, and do not be afraid to phone a friend to understand what they have done.
At this year's conference, we will be having an honest conversation about all things succession planning. Real stories about what happens when there is a plan and what happens when there is none. We will talk about the five things that must be in place before an emergency, who should and should not be your successor. And we will help give you a place to start your journey.
You will sleep better once you have started. See you in Chicago!
Join me and Jonathan Davis, CarrieAnne Kowalczyk, Kimberlee Langford for our session "Owner-Proof Your Agency: Continuity Plans and Smart Exits" on Wednesday, April 29th at 10:15 AM at the BenefitsPRO Broker Expo.
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