- Growth – the owner is focused on driving the revenue, delegating work to lower management
- Maturity – stabilizing revenue, increasing attention to expense management and retaining employees
- Decline – increased competition, changes in the playing field and decrease in demand for product
Business owners are often so consumed with their business, that matters such as having a contingency plan get moved to the back burner.
A contingency plan is vital at every stage of the business, regardless of the business owner’s age. A business owner’s absence can have a major impact on the business.
There are many uncontrollable situations that can divert the business owner’s attention and most occur without notice such as:
- An accident at work or personally (for instance, a car accident)
- A prolonged sickness
- Marital or relationship breakdown
- Illness or demise of a family member
- Premature demise of the business owner
This why a contingency planning can and should be dealt with at every stage of the business. Overall , contingency planning should involve some or all of the following strategies:
- Communication: Business owners need a detailed communication strategy (process) to address the needs of key suppliers, clients and employees
- Life and/or critical illness insurance: Insurance coverage is a valuable resource to reimburse for expenses incurred due to the loss of a key executive (business owner), to provide cash for debt repayment, to avoid credit recall and to fund the buy-sell of shares
- A shareholder’s agreement: When there is more than one shareholder there should be an agreement in place that states what happens in the event of a contingency need
- Support team: Business owners need a strong management team that understands their roles in the event of a contingency need
If you own a business or plan to start one, make sure you have a contingency plan in place and that you revisit your plan at every stage of your business and with any life changes.