When your business is doing well, it’s easy to just work “in” the business and not “on” it. In other words, the day-to-day customer and client demands dictate your day and you don’t take the steps to focus on important ways to position your company for the future.
One of these actions is strategic planning. Which includes SWOT—Strengths/Weaknesses/Opportunities/Threats—analysis.
The “T” in SWOT analysis stands for threats and there are a number of legal threats to operating a business. Consider these questions:
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If you become incapacitated, who can legally make decisions for the business?
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Can this be done promptly and without costing a fortune?
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Will your business partner be required to buy you out so you can have income to pay your bills?
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What will be the price and the payment terms?
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Could disability insurance fund the buy-out?
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What if you unexpectedly pass away?
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Will your ownership end up in probate?
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If your spouse survives you, will he or she be able to have the funds from the business to live on?
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Can the business afford to buy out your interest, or is there insurance to fund it?
All of these issues and others are important to the owners of a business and the viability of the company. Spending time “on” the business by addressing these issues in a buy-sell agreement can save significant costs as well as taxes and reduce the stress to business partners and family during these difficult events.
Taking the time to work “on” this will position your company to withstand potentially devastating events in the future.
