I’m a big fan of Marketplace. Kai Ryssdal and the contributing reporters do a smashing job of summarizing complex financial topics and explaining how when we talk about money we cannot leave out the human element. Such was the case when I was listening in on March 31 when Kai spoke to founder and CEO of Boston Beer Company (Sam Adams Lager).
It was a fun exchange. Near the end of the interview Kai asked in sum, “how does this company keep going when you’re not here.” Mr. Koch’s response of a simple succession plan “don’t die.” He sounds like a robust 65 to be sure, but that’s no kind of estate plan.
Sadly, that’s the response of many business owners. “If we just don’t think about something, then it won’t ever happen.” Nobody enjoys the prospect of mortality, but it doesn’t make it any less certain. Business owners are notorious for not wanting to address estate planning because, in addition to the somewhat unpleasant subject matter, they tend to be independent, formidable people who can’t envision leaving what they have built to someone else’s care.
The problem with this plan (that you’ll drop dead) and thinking you will always be there for your business is that it overlooks two things. First, there will be chaos in the business with a passing and no plan in place. Value in the company can quickly be lost and what was once an asset for your family becomes an albatross in estate administration. Have co-owners you say? Even more so. Second, there are a considerable number of people who have long periods of incapacity (physical and mental) before their death. The negative impact of a sudden incapacity on small business cannot be overstated.
To be sure, thinking about your business, who should manage it all, maybe setting up/funding buy sell agreements, and what happens at your passing is stressful. Making decisions about trusts, wills, durable powers of attorney, advance medical directives as vehicles for a plan, well, I know it’s a bit overwhelming too. But not having a business succession plan leaves your business drained of value and your employees and family overwhelmed with trying to manage it all.
My advice is this: Relax. Have a beer (safely). Then give me a call and we can sort it out together.