How to Plan for the Big D's: Death, Divorce, Disability, Disaster, and Disagreement

Life is unpredictable and, many times, uncontrollable. Sudden death of a business owner can throw the company into turmoil. Divorce and the subsequent division of assets can disrupt the life cycle of a business. A stroke or other disability of the founding owner causes disarray in the strategy, relationships, and, ultimately, the revenue of the business. Natural disasters and internal disagreements are self-explanatory, but both have the power to derail the company's growth.

Now that you are thoroughly depressed, let's look at how we can plan and perhaps reduce the Big D's impact on your company and your bottom line.

Here are some ways to mitigate the negative impact of each of the five D's on your business:

• Death – Benjamin Franklin said there were two certainties in life: death and taxes. While we can predict the timing of one of those, death can come suddenly and unexpectedly. To protect your life's work and your family, it is essential to have a strategic plan in place. Determining a succession plan, memorializing the critical processes and procedures, and recording important notes about relationships and customer preferences can help. Cross-training your Executive team is also a good idea to ensure that the company's essential functions are understood. It is not a pleasant task, but ensuring that your business will thrive even when you are no longer here is a gift.

• Divorce – In a divorce, assets are divided. It's crucial to document ownership of assets and income while the relationship is stable.

• Disability – Yet another "D" that can be unpredictable and utterly life-changing. Planning for this possibility can be difficult, as we can never know what illness or accident may change our lives and to what extent. Keep your Executive team in the loop of your decision-making process, and create redundant systems to eliminate the impact of a sudden illness. Having a credible "second" who can step into your role is also a significant step toward minimizing the effects of an unplanned disability.

• Disaster – Storms, tornadoes, a failing economy, political upheavals, social unrest, or a pandemic. Unpredictable and unpreventable, a disaster can wreak havoc on your company's operations or profitability. Covid-19 has provided all business owners with the opportunity to pivot their business, adapt to new social standards, and retrain employees in a new economy.

• Disagreement – People run businesses. When people disagree on some aspects of the business, it can impact the health of the enterprise. Clearly defined roles, ownership stakes, and controlling interests are crucial to avoid disagreements. If you have business partners, each partner should understand the company's goals and what should be done if one of the 5 D's occurs.

The Bottom Line

There are so many events in one's life that can be difficult – if not impossible – to predict and control. Planning is the best way to ensure that you are prepared, and your business will continue, no matter what obstacles arise.

Planning for the 5 D's also demonstrates to potential buyers and investors that you have strategies to account for any eventuality that may harm the business. Having a Disaster Plan in place, training key personnel in critical operations, and having a succession plan validate your leadership's strength and resiliency.

And if one of the 5 D's have convinced you that it may be time to sell your company, then consider a proven and systematic process called Growth to Exit®. Over 12 weeks, we teach you what a buyer looks for inside a company and the steps you can take to ensure the buyer likes what they see. Pre-sale planning is essential to a successful exit.

Your company is the product. Growth to Exit is the process. The buyer is your customer.

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