Preparing Your Family Business for the Unexpected: Creating an Emergency Board Plan - part 3 of our blog on business succession planning
Many family business owners focus on long-term strategies when thinking about estate planning. But what about the immediate, day-to-day decisions that need addressing if you’re suddenly unavailable due to death or incapacity? This is where an Emergency Board Plan becomes invaluable—a strategic tool to protect your business during short-term disruptions and safeguard its future.
What is an Emergency Board Plan?
An Emergency Board Plan outlines key roles and responsibilities to guide the business in the event of your sudden absence. It’s not a legally binding document but serves as a practical, step-by-step guide to maintain operations, reassure employees, and instill confidence among stakeholders during a transitional period.
Key Elements of an Emergency Board Plan
1. Communication Plans
Clear communication is crucial during a leadership transition. The plan should outline how to inform staff, clients, suppliers, and partners about your absence. Reassuring stakeholders with a prepared response prevents panic and maintains business stability.
2. Financial Management Protocols
Specify steps for handling urgent financial matters such as managing cash flow, paying debts, and ensuring signing authority for checks. This helps prevent disruptions and builds trust with financial institutions.
3. Temporary Leadership Roles
Identify key personnel or trusted colleagues who can take on leadership roles temporarily. The plan should:
• Assign decision-making responsibilities.
• Outline how to hire interim executives.
• Include processes for involving trusted advisors to navigate the transition.
4. Regular Updates and Reporting
The interim team should report back to your family or executors regularly. Establish timelines for reviewing decisions within the first week, month, and quarter to ensure all critical actions are addressed.
Making It a Living Document
An Emergency Board Plan isn’t a one-time effort. It should evolve as your business grows and your family dynamics change. Share the plan with your attorneys and key stakeholders, and review it regularly to keep it relevant.
For added security, consider creating an Enduring Power of Attorney, which focuses solely on your business interests. This allows separate attorneys to manage your business and personal assets, reducing potential conflicts of interest.
Overcoming the Hesitation
It’s natural to feel hesitant when drafting an Emergency Board Plan. Many business owners worry about relinquishing control, believing no one understands their business like they do. But this process isn’t about losing control—it’s about protecting what you’ve built. A well-thought-out plan ensures your business thrives, even if the unexpected occurs.
For businesses with intricate operations, the Emergency Board Plan can also include contingency strategies, such as plans for an organised sale to avoid rushed decisions or 'fire-sale' scenarios.
Expanding the Plan Into a Long-Term Vision
As your Emergency Board Plan takes shape, it can become the foundation for your long-term succession strategy. Address growth opportunities, market challenges, and family shareholder expectations, ensuring alignment with your broader goals.
With tools like an Emergency Board Plan, a structured will, lifetime trusts, and solid company governance, succession planning becomes a proactive and manageable process. By preparing today, you can secure your business’s legacy for tomorrow.