What will happen to your company after your death? Will it live on without you? Or will it be forced to close, ending the life of another small business?
These are questions that many fuel dealers may have in the back of their minds. But they fail to address them in a timely manner. Really, who wants to face their own death and make plans “just in case”? Some business owners pass it off as “someone else’s problem once I am gone.” But do you truly want to burden your loved ones with so much uncertainty?
I encounter many owners who do not know when they will transfer ownership of their business or how it might be accomplished. If you are around to coordinate that transfer, great! You can put your desires in place then.
But what if you are incapacitated or die before plans can be made? Who will run the business? Who will call in the payroll? Who knows all the passcodes and passwords? What is the combination to the safe? Where are the insurance policies? How can I make sure your children will gain control of the business? How can you make sure the business is sold at its best price? How do you prevent a distress sale to a hated competitor?
Death or incapacitation affects an independent energy dealer far more than it does a larger company. There are many people with a stake in the orderly continuation of your business. Your immediate family needs the continued cash flow from a viable business. Suppliers need to be paid or they will shut off product. Customers need deliveries or they will quickly move on to another company. Payroll needs to met, expenses need to be paid. The banker needs to be reassured that his loan is not at risk. Losing you will be stressful enough without your family having the security of knowing that you have made concrete plans to provide for them.
My father owned several liquor businesses. He died suddenly at the age of forty-two, on my twenty-first birthday, leaving my mother and five children. Talk about being unprepared! We couldn’t even open the company safe. Much like the energy business, the liquor industry had a strict “pay in three day” rule. After three days passed the company was “black listed” and every wholesaler shut us off. Needless to say it was a nightmare. My mother turned to me, her oldest child, to take charge. I learned a lot about life and people who try to take advantage others, all in the name of “lending a hand.” We survived – barely – but it was a painful experience.
In my career as a CPA working in the energy industry for thirty-five years, I have often observed the same pattern as the one I lived through. It’s just sad! I understand that you might have no idea where to start the planning process or who should manage your business until your family is ready to assume control or sell the business at its best value. Let’s look at both options.
Keeping the business in the family
Perhaps you believe that the business should stay in the family. What if they are not quite ready? You need someone who can run the business until your spouse becomes comfortable managing day-to-day operations, or until one of your children is out of school and ready to learn the business.
Sell the business at the best value
Maybe you already know that someday you will sell the business. You don’t want your kids to be in the business, you want a different life for them. Your spouse would never want to take on your job either. You should have in mind someone that you believe would be interested in acquiring your customers and treating them like you do. Conversely, there may be someone you absolutely do not want to take over your business. Either way, you must make your wishes known before it is too late.
Some items that need to be documented and updated as needed include:
- What do I want to happen after death or incapacity?
- Who should manage my business in the short/long term until my wishes are met?
- What are the access codes for software, banking, office safe and other important records?
- Where are insurance documents?
- Where are the keys?
- Where is the spill plan and who should be called if an incident occurs?
- Who are my lawyer, banker, accountant, and insurance agent?
- Who is in charge and for how long?
- Where is this plan going to be stored for immediate access?
There are two certainties in life: death and taxes. (That’s the world I practice in!) What will the life of your company be like after your death? That is up to you and the steps you take while you are still here to affect the outcome.
John H. Nardozzi, CPA, CVA, MST is the owner of Nardozzi Consulting, LLC (www.nardozziconsulting.com), co-owner of Best Practices Group, Inc., and co-developer of FireDrill, a crisis management program for oilheat and propane dealers. This article originally appeared in the July/August 2013 edition of Indoor Comfort Marketing magazine.