There’s a good deal of wisdom contained in the popular adage, “Hope for the best and prepare for the worst.” It holds especially true for business owners. We should be guardedly optimistic about our futures and cognizant of the fact some things are out of our control.
However, a recent study from the National Association of Corporate Directors suggests that most business owners are both hoping and preparing for the best, with a whopping two-thirds of public and private companies stating that they hadn’t instated a formal succession plan for their CEOs.
The future is unpredictable, and failure to institute a formal succession plan can bear devastating consequences for your business and your loved ones. Nobody knows this better than Amir Eyal, CEO of financial advisory firm Mylestone Plans. Eyal barely avoided said negative consequences when Bruce Myles, his father-in-law and former CEO of Mylestone Plans, fell ill unexpectedly and passed away shortly thereafter.
If an adequate succession plan had not been in place, Eyal would have inherited the entire business and its assets, and wouldn’t have been legally bound to compensate anybody, including his mother-in-law. Fortunately, Eyal arranged for his in-laws to write out an agreement before his father-in-law’s death, so that his mother-in-law would be properly compensated by a legally binding contract.
This story ended well, but the tragic situation Eyal and his father-in-law faced is, regrettably, far from rare. Unexpected accidents and illnesses can destroy a business and wreak havoc on families. To avoid the situation that Myles and his family narrowly avoided, Eyal suggests the following steps for implementing a successful succession strategy.
Nobody knows what the future will bring, no matter how certain it may seem in the present moment. And while business owners should look to the future with optimism, seeing the world through rose-colored glasses can cause us to inadequately plan for those unexpected curve balls life can throw at us.
Ultimately, as Eyal shows, being proactive in planning for succession will give you the confidence and peace-of-mind to know that your business and your loved ones will be taken care of—come what may.
This article was written by Larry Myler from Forbes and was legally licensed through the NewsCred publisher network.
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