There are a number of different aspects to business continuity planning. All of them need due care and attention and the right strategies put in place. And the key people in your business who you can’t operate effectively without form one critical part of your business continuity planning. That’s not a mystery. Those people could be you, your business partners or directors, or senior managers. Even highly skilled individuals below senior level.
The definition of business continuity is “an organisation’s ability to maintain essential functions during and after a disaster has occurred.”
Effective business continuity solutions look at your people as part of your disaster recovery. What happens if you lose a key member of your team? At a director level can you continue to operate bank accounts, fulfill contracts and pay bills? How would you pick up the slack for strategic directors’ responsibilities? We’re not talking about someone leaving a business. Replacing them in that case is an HR function.
The aspect of business continuity that we’re considering in this article is the sudden loss of key people to accident, incapacity, or death.
The answer is a strategy that integrates elements of estate planning, business continuity planning, and building strong relationships with suppliers and customers.
Building strong relationships
As a rule, businesses build strong relationships with their customers and suppliers and build a network of trusted advisors around them. That network could include your accountant, tax adviser, a mentor or business coach, and people who you rely on and trust to keep you grounded and provide professional advice when you need it. And building strong, long-lasting relationships with your customers makes good sense from a sales point of view, never mind if you need to have a difficult conversation one day.
Are you transparent with your customer? Do you have a friendly, but a professional relationship where you can speak openly and honestly about what works, what doesn’t, and how you can work together for both of your interests?
Business continuity planning
There is plenty of advice available about business continuity planning. it covers a spectrum of potential issues including flood, cyber attack, burglary, fire, or any event that will disrupt your business. Every business, no matter how large or small, should put a business continuity plan in place to protect themselves from disaster.
Estate Planning for Business
Estate planning for business covers a number of issues that may arise in your business. And it should form a key part of your business continuity planning. More information here
You as the owner or managing director fall ill, are incapacitated, or die.
In this instance, your family is likely to be the people to pick up the slack. They will need to understand your business, responsibilities including contracts and customer base, and access to finance, bank and accounts to continue paying bills and operating the business. If you are ill or incapacitated you need a structure in place that effectively gives control of your business to someone you choose, and recognises that your chosen person or people have the authority to continue operating on your behalf. Your bank, contracts, operations, and payments continue without you in this case.
A Lasting Power of Attorney is the vehicle that you could use, and as a legal document protects you, your business, and your chosen replacements. If you don’t have this in place your contracts could become void, your bank could freeze your accounts so you can’t pay staff and your bills, and your operations could be challenged. In fact, in the worst case, your business may not be able to operate at all. Read more about Lasting Powers of Attorney here
But the story doesn’t end there. Your business must be included in your own estate planning and your will so that it can be properly considered as part of your estate. More information here
Your business partner or fellow director is taken ill or incapacitated
This is a similar scenario to that above. Your business partner is unable to fulfill their duties through ill-health or incapacity. You might think that you can simply carry on, but what if your bank account requires both of your signatures, or some of your contracts are signed by your business partner? You may be unable to authorise payments for payroll, or pay bills. And if contracts are signed by them, they may become unenforceable. Your relationships with your customers will help here if you have taken the time to build them.
To deal with issues of authority, your business partner should have a Lasting Power of Attorney for business in place too. That could cede responsibilities and authority to you, or someone capable of managing those responsibilities. It’s important to agree on who takes on those responsibilities. Don’t be tempted to choose your nearest relative simply because they are your nearest relative. Chose the person r people most suitable to understand your business and take on the responsibility should they need to. And the same applies to your business partner when they make their choice.
The ideal scenario is that you and all of your business partners agree on who will step up should the need arise. If you have any business finance in place you could face issues here too whether it’s you or your business partner who is incapacitated. Our sister company Liddle Perrett can give advice on suitable mortgage and commercial finance protection. Contact the team here.
A key member of staff is taken ill or is incapacitated
This is a slightly different scenario. It’s much more likely that an employee will have more operational responsibility than strategic. You will still need to fill the knowledge and responsibility gap they leave, but you can mitigate issues through the business continuity process by providing a backup solution. You might, for example, train a second member of staff in their responsibilities, or one of your business partners, senior management team, or board of directors could pick up the slack should the need arise. In this case, you could be well served by including an HR specialist in your business continuity framework.
How the Team at Will Protect can help
Our team has significant knowledge and experience in dealing with complex estate planning issues. often integrating a business into an estate plan can be challenging, and putting in place the right structures to safeguard an operational business equally so. To find out how we can help both you and your business, get in touch today.