Planning for emergencies in a (large) one-man company
1. Make sure that at least one other person can make binding decisions in your absence. My client divorced his ex-wife a few years ago, and bought out her shares of the company. At the time, he simply did not want to place anyone else in a position of authority or trust within his company. However, better times came, and as he went back to work he forgot about appointing someone, say, as a secretary or vice-president, because he was a natural leader. Unfortunately, however, when he died, no one could keep the company, which had numerous large-scale construction contracts, in motion. Had someone been able to step in as an officer (or manager) of the company, contracts could have been continued, and the process, while practically not seamless, would at least have been a legally smooth transition.
2. Plan for someone that has practical experience in running the company, in your absence. In a sole proprietorship, a business may simply fold with the death of the owner. In a larger company, however, it is not so simple: there are numerous workers employed, contracts to be fulfilled, people who are relying on the company to stay around and complete its obligations. In a construction company, at least one person has to be a licensed contractor. My client was that person. In his absence, family members are scrambling to either obtain a license for one of the employees or to hire an employee holding such a license.
3. Make sure that someone knows the important details about your company and its business. Once again, in a sole proprietorship, the business may fold with your death. However, in a large company, at least one other person in the company should know important details such as what contracts are outstanding, how to pay the bills, the location of accounts, etc. Fortunately, my client kept at least two co-workers knowledgeable about these details, and in this interim period, they have been able to keep the company above water by, e.g., paying employees.
4. Plan your estate. Most fortunate of all, my client did make a good estate plan. He set up a trustworthy executrix, and made provisions for what would happen if his children were still minors (and one is). Had my client not made such provisions, his entire estate would be tied down in a slow and difficult process since the minor would have to have a guardian appointed and the company ownership would stand in a quagmire. Instead, the executrix will soon be appointed by the Court, and will be able to then appoint officers of the company and help the company get back on its feet during these difficult times. Therefore, though some matters within the company could have been planned better, my client's overarching desire to take care of his children inadvertently helped prevent a much larger crisis in his corporation.
If you have any questions about succession planning for your business, contact me at firstname.lastname@example.org.