Will Your Business Die, When You Die?

by John Bovard

George was a man's man, always win-ning at his weekly poker games, seemingly never affected by the endless stream of Jack Daniels he consumed. In his youth he became fascinated with his neighbors cabinetry business. He loved creating beautiful pieces out of the delicious smelling wood. Coupled with George's desire to be the master of his own destiny it was natural evolution that he started his own firm. So at age twenty-four in a run down building, George proceeded to build a business along with a reputation known for unique designs and high quality pool tables. His pool tables were known as the best in the industry.

George and his wife Karen had no children. They lived the good life, great home, new cars and exotic vacations. George told Karen they could get $2,000,000 for their business. On a snowy night in late January, Jack Daniels, rich food and long hours caught up with George. George was 48 years old when he died.

Along with Georges demise went the firms relationship with its clients. Karen was told she was lucky to get $500,000 for the company when she sold it. With Georges' $20,000 a month salary gone, Karen now faces a much different retirement and a drastically altered life style.

Bill was on top of the world when he bought his computer firm. By leveraging their 401K and convincing his wife Sheri to put her $50,000 inheritance into the venture they were able to obtain the company of Bill's dreams.

In an industry dominated by introverted people, Bills bright personality stood out. His jeans always creased and his crisp white shirts laundered with heavy starch.

He knew his industry and communicated well with his clients. Year after year he amassed a loyal and ever growing list of customers. Bill was very healthy and never smoked or drank. With a cute wife and four boys, they appeared to be the model American family.

At the age of 42, he had his business appraised. Bill reasoned that the million and a half dollars he was told he could receive for his business would grow to a much greater number if he waited another ten years to sell. Furthermore, one or perhaps all of his boys may someday wish to join him in the business.

At age forty-three, dying in automobile was not in Sheri, Bills or the employees plans.

Sheri eventually sold the business for twenty-five cents on the dollar and the new owner laid off 50 percent of the employees.

George and Bill had many things in common, they were both entrepreneurs, they both built a successful business and they both made the most common of mistakes that entrepreneurs make, failure to address the perpetuation or succession of the business in the event of death or disability.

Small businesses are created by entrepreneurs, the successful entrepreneurs are by nature optimistic. Optimistic people although realistic, tend to focus most of their energies on building and growing their businesses. Although the succession of their business is thought about from time to time it becomes an item that will be dealt with" one of these days".

As the old adage goes, "one of these days", is, "none of these days".

If you are one of the many, many small business owners who hasn't addressed this aspect of your business, pick up your phone now and call one of your closest advisors, set a date to meet and address this issue then set a date on your calendar when you will have contingency plans put into place in the event you are not there to run your business.

There are many tools available to you whether it be grooming the right people in your organization, establishing an ESOP, purchasing life/disability insurance.

Please do it now.

Do it for yourself--in case you are disabled to maximize the value of pro-bably your largest asset.

Do it for your wife and children.

Do it for your employees.

John Bovard, is president of Insurors and Investors. He can be reaches at 816.283.3079 or by e-mail at JBovard@Ins-Inv.com.