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The Plight of the Disabled Entrepreneur

The Plight of the Disabled Entrepreneur

Most successful entrepreneurs have a large reserve of confidence that has been honed through successful ventures. And confidence is good as long as it isn’t confused with indestructibility. None of us as business owners can predict the future with any certainty. So what happens if we are faced with a situation like Tom’s?

Tom Bellows was a Type A personality and a serial entrepreneur. He was the center of attention in any room, a gregarious man loved by everyone. He ran his businesses with passion and joy, and was appreciated by his employees. His pride and joy was the Harley that he drove everywhere, and he was known for pushing the motorcycle’s limits.

Tom drove the bike to work on a clear day that turned from sunny skies to a thunderstorm by the time he was ready to go home. Undeterred, he pulled out his rain gear and took off. They say that the truck driver’s visibility was impaired by the rain, and he never saw Tom as he came around the bend in the road. Fortunately, Tom survived the encounter, but doctors aren’t sure how long he’ll be in a coma, and they believe he may be permanently disabled.

There are a few core personal issues that could face the business owner at the pointof disability. They include:

How long will the business be able to operate without the owner’s leadership?

When you think of any great team there is normally one strong leader. How long will leadership continue if the owner is disabled? The absence of leadership can cause the synergy of a team to crumble almost overnight. There is no simple solution to this vacuum that can occur in the management process, because every situation has a different set of facts and considerations. But it’s an important subject that should be discussed.

How long will the owner be able to continue to take compensation?

In most situations it is the entrepreneur’s passion that drives the growth of the enterprise. When that person is removed from the equation the negative repercussions could be dramatic. Who is going to drive sales? Who is now in charge? As revenue slides and efficiency decreases, it is probable that a time will come when the owner will face a reduction in his personal income.

How would an owner’s disability affect the employees?

The first question is how many of the employees would stay for an extended period of time if the owner is disabled. The ultimate success of any business in this circumstance depends on how things are handled immediately after the crisis. All of the employees are in a heightened state of alertness concerning everything that is going on around them. These are regular people that depend on this job to take care of their families and pay the bills. In the moment when they feel that the business is in jeopardy of failing; they will begin to look for other employment.

The good news is that the negative impact of these circumstances can be reduced considerably with proper planning. For starters, every owner of a closely-held business should have on file, somewhere where family members can find it, a letter outlining the business management particulars. The business is usually the primary asset of small business owners. If the owner is permanently disabled, it’s important that the business can continue until a buyer can be found and a sale closed.

If you are a sole proprietor, your family, or some key employee, will be required to step in and oversee operations to keep the business going until a transition of ownership can be consummated. If you are a partner, your family needs a copy of the buy-sell agreement (assuming you have one!) along with your letter of instructions. You can write this in script form or as a list of items for them to address. At a minimum the following should be included:

  • Who to contact in the company.
  • Key employees and their duties.
  • The company’s attorney and financial advisors, including contact information.
  • The company’s CPA and contact information.
  • The company’s insurance agent and contact information.
  • Major customers to be contacted and notified of continuing operations.
  • Major vendors to be contacted and notified of continuing operations.
  • Banking – who is in charge of deposits and who is in charge of payables.
  • Who might be interested in purchasing the company and contact information.
  • Who has made past offers to purchase the company, when, and contact information.
  • Special notes of items you believe important for them to know.

Customers and vendors are included in the list because good communication can reduce or eliminate any fears that might arise. Once customers and vendors understand they are important and that someone is taking care of them, the company will have fewer problems continuing operations.

If you are a professional service company and licensed through a state agency, it is imperative that you provide the agency contact information. Also, list anyone you know that is a licensed professional that would be willing to step in and help during transition. Many licensed professionals have made prior arrangements with another in their profession to assist in case of need. Consider this letter of instructions to your family another important insurance policy.

No business owner or professional is indestructible! Begin planning now for what will happen if you can’t continue in your current role.


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