It is a subject that entrepreneurs often do not think about: what happens to the business in case of emergency?
Suppose as an entrepreneur you suddenly die, become disabled or end up in a divorce. What effects will past choices, the current organizational structure and set arrangements then have on the business?
Entrepreneurs are often pragmatic, they only deal with a problem as soon as it arises. But when the above situations arise, it can just turn out to be very unpleasant for the business. It is wise for entrepreneurs to prepare an emergency plan as a precaution.
How to act in emergency situations?
Entrepreneurs are ambitious, energetic and want to move forward. They don't like to think about emergencies or unpleasant scenarios. Yet they are issues that every entrepreneur can face. That's when it's nice to have thought about the future of the business.
What happens to the company if you, the entrepreneur, get into a car accident and are in a coma for months? Who gets to act on your behalf at that point? What do you want to happen? What are the consequences for the business? An emergency plan accurately describes all such scenarios, choices and effects.
Living will provides clarity
It's a shame if you've worked for years to ensure the success of your business and it becomes uncertain overnight when the entrepreneur finds himself in an emergency position. Most people draft a will upon death. However, a will does not cover the risks and has nothing defined for emergencies without death. This is why drawing up a "living will" is a godsend. In this will it is established who may act to carry out things, how matters are distributed or how matters are arranged in specific emergency situations.
It is not easy to make choices in such situations. Suppose a married couple works together in the business, what is the relationship if they get into a divorce? These are things you can arrange in advance without these problems being current. This does not have to be in detail, but you can already say, for example, that one of the two will no longer work in the business. Agree very clearly with each other in a contingency plan: if something arises, this is how we will arrange it.
Continuity affects business value
Adagium supports entrepreneurs by providing information. It's always about the person running the business and how to ensure the continuity of the business. In SMEs, the entrepreneur is often also the company. And if something happens to the entrepreneur, it directly affects the company. Adagium incorporates this into the risk profiles for valuing a business. In the contingency plan, different scenarios are worked out and how to act. Suppose you, as an entrepreneur, drop out, what effects does this have on the value of your business.
Make sure you review the emergency plan every four to five years to keep it current. A business can grow rapidly in about five years and a lot can change. Changes within the business or changes in vision and experience of the business owner may cause the design of an emergency plan to need to be adjusted.
