Most business owners have some idea of how they want to leave their business. Perhaps they hope to sell when the time is right or transfer the business to the next generation. They may already have a plan in place. They may have spoken with their advisors about the financial, legal and tax considerations. These are all important steps. But there is another question worth asking:
What if you had to leave the business earlier than you expected?
What if circumstances required you to step away tomorrow? It isn't a pleasant question to consider. But it can be one of the most useful questions a business owner asks. Because there is a difference between having a plan for when you expect to leave and being prepared for when you are not prepared. i.e. death or disability.
The Plan We Expect to Follow
When we think about succession, we often imagine a fairly predictable sequence of events:
The owner begins preparing for retirement. A successor is identified. Responsibilities are gradually transferred. The financial, legal and tax considerations are addressed.
There is time to prepare. Time to have conversations. Time to mentor and prepare the next generation for leadership. But business doesn't always follow the timeline we have in mind. An unexpected health issue may change someone's plans. An accident may result in premature death. A family situation may require more attention. Circumstances may change in ways that make it difficult for the owner to continue in their role.
Sometimes the change is temporary. Sometimes it isn't.
The point isn't to assume something will go wrong. It is to recognize that the future is not entirely within our control. And that raises an important question.
If your plans had to change, how much would need to happen before your business could continue without you?
The Business That Depends on You
Many entrepreneurs are deeply involved in the day-to-day operations of their businesses. They know their customers. They understand their employees. They make the important decisions and know how to resolve problems that others may not even recognize. Over time, much of that knowledge becomes second nature. The owner may not even realize how much the business depends on their experience and judgment.
But what happens when the owner is no longer available to answer questions? Who can make important financial decisions? Who knows the status of key customer relationships? Who understands which commitments have been made and which decisions are still outstanding? Who has the authority to act when something unexpected happens?
These aren't necessarily signs of a poorly managed business. They are questions that can reveal where too much knowledge, responsibility, or decision-making authority rests with one person. For many owners, the first step toward a more resilient business is recognizing those dependencies. You cannot prepare for something you haven't identified.
The Succession Plan Stress Test
One way to explore these questions is to put your succession plan through a simple stress test. Imagine that, for whatever reason, you couldn't work in your business for the next 30 days. You don't have to assume you will never return. Simply imagine that you are unavailable and cannot make the usual decisions.
● What happens next?
● Would your employees know what to do?
● Would someone have the authority to make necessary decisions?
● Would important customer and supplier relationships continue to be managed?
● Would your family know whom to contact?
● Would the right people be able to access the information they need?
You may discover that many things are already well covered. Perhaps you have a strong management team, clearly documented responsibilities, and employees who are comfortable making decisions independently. That is valuable preparation. But you may also discover that certain decisions still depend on you, important information exists only in your head, or nobody has the authority to take over particular responsibilities. That is useful information, too. The purpose of the exercise isn't to find fault with the business you have built. It is to understand how well the business can function under different circumstances. Once you understand that, you can begin to address the gaps.
Four Areas Worth Examining
A stress test doesn't have to be complicated. You can start by looking at four areas of your business:
1. Decision-Making
Who makes the important decisions when you are unavailable? Some decisions may be straightforward. Others may involve significant financial commitments, employees, customers, or business strategy.
Consider which decisions your management team can make and where additional authority or preparation may be needed. The goal isn't to remove yourself from every decision. It is to ensure the business can keep moving when you are not available.
2. Knowledge and Relationships
Every business has information that is essential to its continued operation. Some of it is documented. Some may be held by key employees. And some may exist only in the owner's memory.
Think about your most important customer relationships, supplier arrangements, financial relationships and operational processes. Who else understands them?
You may not be able to transfer years of experience overnight. But you can begin sharing knowledge, documenting important processes, and involving others in relationships that have traditionally depended on you.
3. People and Responsibilities
Having capable employees is one thing. Making sure they understand their responsibilities during an unexpected change is another. Does your management team know who would take the lead? Are responsibilities clearly defined? Have potential successors had opportunities to develop their leadership skills?
These conversations don't need to happen all at once. But preparing people takes time, and that time is easier to find when there is no immediate pressure.
4. Ownership and Personal Planning
The operational side of the business is only part of the picture. If you were unable to work, would there be clarity about who could make decisions on behalf of the business? Are your ownership arrangements, legal documents, and continuity plans appropriate for that situation? Would your family understand the arrangements and know which professional advisors to contact? Would your family have sufficient financial resources to maintain their lifestyle or would they be financially strapped?
These questions may involve your lawyer, accountant, financial advisor, or other professionals who have taken the time to understand your values, vision and circumstances.
A business continuity plan, a succession plan, and an estate plan serve different purposes. But they need to work together as part of a broader approach to preparing for the future. Having one doesn't necessarily mean you have addressed everything covered by the others.
Start With One Conversation
After considering all of this, it can be tempting to conclude that you need to create an entirely new plan. Sometimes a comprehensive review is necessary. But you don't have to begin there. Start by asking yourself one question:
If I couldn't work in my business for 30 days, what would be the first thing to cause difficulty?
Perhaps it would be decision-making. Perhaps it would be a key customer relationship, access to financial information, or uncertainty about who should take responsibility. Whatever the answer, write it down. Then identify one practical step you can take to address it. You might document a process, delegate a responsibility, involve an employee in an important relationship, or arrange a conversation with your professional advisors.
You don't have to eliminate every possible risk. The goal is to make the business better prepared, one step at a time. And that preparation can be valuable whether you plan to retire next year, in ten years, or not for a very long time.
Preparedness Creates Possibility
We often think of succession planning as something that happens toward the end of a business owner's career. But many of the most important parts can begin much earlier. Developing future leaders. Sharing knowledge. Clarifying responsibilities. Strengthening relationships. These aren't simply tasks to complete before leaving a business. They are ways to build a stronger business today.
You may still choose to retire on your original timeline or pass the business to the next generation exactly as you intended. But if circumstances change, you will have taken steps to make that change easier to manage. That is the value of putting your plan to the test.
It isn't about expecting the worst. It is about giving yourself, your business, and the people who depend on it more room to respond when life takes an unexpected turn.
In my book, Don't Leave a Mess, I explore why preparing for the future involves more than deciding what happens to your business or your assets. It also means considering the people who may need to step in, the information they will need, and the conversations that can make a difficult transition easier.
You don't have to know exactly what the future will bring to begin preparing for it. But you do have an opportunity to make things clearer today.