Small Business Health Quiz #1

Today, I'd like to begin a deeper conversation around the foundations of your business. I offer these questions on an annual basis, and they are worth considering AT LEAST that often...

My Small Business Health Quiz (Part 1)
“Be more concerned with your [business'] character than your reputation, because your character is what you really are, while your reputation is merely what others think you are.” --John Wooden

These are questions that might raise a few concerns, and that's fine -- it's what we're here for. Alongside establishing clear measurables for success (KPI's, Key Performance Indicators), these are the sort of things that effectively-growing small businesses really need to get a handle on, regardless of their tax situation.

I like to share these questions regularly with my people, simply because it's good practice to continuously revisit these things and ensure we're headed in the right direction.

And further, as a business owner, it's important that you take a REGULAR, clear-eyed look at the underlying legal and financial foundations for your business.

As we all pull our tax documentation together, I can't think of a better time.

This is a bit of a different approach than I normally take in my Strategy Note, but if you take it seriously ... it can be a transformative process.

My Small Business Health Quiz Part 1: Is the value of your business firmly established?
Questions to consider:

• Have I ever had my business value appraised by an outside party?
• Do I have a formal buy/sell agreement in place?
• Is my buy/sell agreement funded?
• Does my buy/sell agreement adequately protect my heirs, my business, and my partners?
• Has this agreement been reviewed in the last 3 years?

If you have any plans to someday extricate yourself from your business (and you should ALWAYS consider your exit strategy), these are critical questions.

#2: Is there an emergency plan?
Questions to consider:

• Do I have a will, and is it up to date with my business wishes?
• Do I have a plan to retain key employees if something were to happen to me?
• Are my assets protected from potential litigation?
• Have I identified and written down my trusted advisors?

Unless you plan to forever cheat death, a business owner would be foolish to not prepare for that event.

#3: What happens next?
Questions to consider:

• Do I have a formal succession plan prepared and on file?
• Does my succession plan have a provision for disability?
• Have I involved both family members AND key employees in my succession planning?
• Do I have a disability buy-sell, or overhead expense coverage?
• Do I have contribution protection for my retirement if I were to become disabled?

Again, these eventualities always seem remote on the front end ... but if your answer is "no" to more than a couple of the above questions, it would be a good idea to get in contact with someone competent to help you fix it.

Look for Part 2, with more questions for you...

Warmly,

Janet Behm