According to Bloomberg, eight out of ten start-up businesses fail within the first eighteen months. While everyone has their pet explanation for this statistic, most of them can come down to one simple answer. Failing to plan.
For the small business owner failing to plan is completely understandable, at the outset you are doing everything you can to get your business up and running and pay the bills. However, the old adage is true: an ounce of prevention is worth a pound of cure.
Failing to plan for situations in both your business and your life can have disastrous effects on both your business and your family. Furthermore, most small business owners don’t see how a problem in their family can affect their business and vice versa. Wondering which corporate structure is proper for your business or getting your will in place seem important, but they can wait “until this business is calm” or “until I have something to give away.” Unfortunately, these statements mean that these issues are not important enough for me.
Because most of us would say that our families come first, I will address the personal planning first. Estate Planning is a comprehensive term that broadly addresses issues of asset distribution, healthcare directives, incapacity planning, and guardianship issues for the kids. While not everyone will need to address all of these issues everyone over the age of 18 should have at least some form of this completed.
Many of these topics will be covered in much more intensive blog post, but here are a few simple questions that need to be answered. I like to call these the car accident questions. Who will make your medical decisions for you in the event you are in a car accident and are unconscious? If you have children, who will be the Guardian for those children if you are in a car accident? If you are in a car accident and are unable to care for yourself for the rest of your life, who will be in charge of taking care of you?
All of these questions are more important than “who will get my stuff when I’m dead”, and they will all be addressed by a good estate plan. Also, none of them have an easy default answer under Georgia law. If left unanswered each would require petitions to the probate court and several hearings to be resolved.
While there are many more issues to address with a business in proper business planning, the same situations can illustrate the need for planning in your business. If you were in a car wreck and incapacitated, who would manage your business? If you were out of commission for two weeks or more, would you still have a business to come back to? Would you be able to make payroll?
Yes I know this seems to be an unpleasant conversation, and no I am not presenting you with any practical advice in this post. There will be many blog post that deal with specific planning issues in more detail. The only practical advice that I will offer you in this post is this: wouldn’t it be better to deal with these problems while you have a clear mind and can prepare for future problems.
If this post has given you concerns about the state of your personal or business planning, please give us a call. We will walk you through the process of making your plans, so that you understand the plans that you have in place.
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