Craig Durosko: Is it time for a fire drill in your remodeling business?
It might not be a fun topic but what happens to your business if something happens to you?
Remember in school, all the fire drills? All that planning in case of a fire. Fortunately, I never experienced the real thing.
Then we grow up and then it is our choice. We don’t need to do that silly fire drill. Or do we? I am talking about planning for an accident or other problem that sidelines you. Like with a real fire, there is a way to plan for the worst and hope for the best.
One thing about this industry: you will find lots of passionate, driven people. Many don’t even know what a 40-hour workweek is, often working 60-plus hours a week. They work early, late, weekends, and do what it takes to get a job done.
Here is the down side. What happens if something happens to you? Is it time to sit down and make a list of your priorities? How do you protect the very thing you are working so hard for?
It might not be a fun topic, and many people don’t want to take the time to talk about it, but what happens to your business if something happens to you? What happens if you were driving to work tomorrow morning and you were “hit by the bus” (we use that term affectionately around our office)?
Some questions to consider
- What are the roles you perform in your company? Can they be done by others?
- Would you want your spouse or family to step in and try to run it or would you want them to be bought out?
- Is there someone that is supposed to take over?
- Are you selling more than 15 to 30 percent of your company’s business? If so, how would you handle that?
- Are you performing roles in your company that you are not paid for? For example, many owners sell, yet only pay themselves a salary for their role as owner, president, etc. It would be hard to replace a president and a salesperson if you did not have the budget to pay them.
- Would your key personnel know what to do, what your wishes were, or have the authority?
- How would your family be protected?
- Would your spouse or family know your intentions? Would they know what to do?
I always cringe when I hear this quote: “There is more of a chance of you becoming disabled than deceased.” In that situation, the same questions apply, as well as several others. What happens if you become permanently disabled?
- • Do you have disability insurance so you don’t financially drain your business or personal account? Think about it, you become disabled, of course you will want to keep drawing a check for your family, what happens when that well runs dry?
- • Do you have a business partner? Do you have a buy/sell agreement with them? Is it funded for disability or loss of life? If you have a buy/sell with no funding, how would your family benefit? How would the business benefit? Have you agreed how the business would be valued to minimize any disagreements?
Planning for the worst
Are you happy with what you have in place? Are there things you can do now to affect the outcome? Make a list and schedule them on your calendar.
- Are you sleeping well, eating well, and exercising? Obviously this is not retirement planning, just preventative care.
- Have you budgeted for replacing yourself?
- Have you purchased term insurance and disability insurance?
- Do you have/need a buy/sell agreement for the business?
- Is there funding in place for the buy/sell agreement?
- Have you determined how to value the business for the buy/sell agreement?
- Do you have a living will?
Sometimes we get so wrapped up in the day to day, we minimize the need for planning. It is when you attend that funeral for a loved one you are reminded of the inevitable and how short life is.
Take a few minutes to plan out the future. Don’t have the money to do it now? Make a plan and then the plan to fund it. Schedule the time to meet with your advisers and key people in your business.