If you are married or have children, it’s highly likely you have purchased a life insurance policy. Why? If something were to happen to you, you want to be sure your family is taken care of, right?
Guess what? Your business is no different.
Nobody likes to think about it, but what if you didn’t show up for work Monday morning? What if you became very sick or were seriously injured in an accident? What would happen to your company in the short run — or worse yet — in the long run, if it were to be weeks or months before you were able to come back to work? Do you have a backup plan?
The reality is that all business owners should be in the process of preparing for the what if, no matter their age or the size of the company. Life is full of uncertainty, and we need to be thinking of a Plan B even when there seems to be no immediate need for it.
Let me warn you ahead of time. Documenting everything that goes on in the office is a huge task and, when done correctly, can easily take a year or more. The process begins when the phone rings. Who is supposed to answer the phone? What do you want them to say? Part of the process is literally to script what should be said. What specific questions should the customer-service representative ask the customer? Who is responsible for entering the data into your customer base? All this needs to be documented.
What about something as seemingly simple as charging a customer’s credit card, for example? It sounds easy, until a new person has to do it for the first time. Who enters data into your accounting software? Is each step documented so that if Mary doesn’t show up one day, Suzie can produce a check for a vendor?
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Go on Vacation
After the owner feels like all processes are fully documented, that is when the fun begins. Now it’s time to take a week of vacation. Instructions to the staff are very straightforward. If they have questions while you are gone, they aren’t allowed to call you. They should be able to look at the appropriate policy or procedures manual and try to figure it out. Don’t answer your cellphone for the entire week
When you return to the office, there will likely be a few questions that were not completely answered by the manual. The process continues by updating the manual, and a few months later, guess what happens? You got it, it’s time for another vacation!
Documenting all areas of direct responsibility will do two things. First, it will allow someone filling in to know what to do, at least in the short run. Secondly, it will serve as great basis for a job description for the new person filling the job.
Train Your Successor
A second mitigation technique is a combination of delegation and training your replacement. Let’s face it, some day you are going to want to retire or sell the company. Having trained the next owner or general manager while you are still at the company will greatly ease that transition.
This is not a simple or short-term process. It literally will take years, so the sooner the process begins, the better off you and the company will be. As the process moves forward, take another vacation and don’t communicate with your replacement. When you return, see how things went. What needs to be tweaked? Later, take perhaps two weeks off, and eventually maybe even a month. (Gee, this is fun!) You are now beginning to enjoy the fruit of your labor. Bottom line, train your replacement so that at some point you can either fully retire or at least let go of the reins and enjoy the fruits of the company you have invested so much in.
There is another good reason to train your replacement before you leave. There likely will be some kind of a buyout arrangement with the new, fully trained owner. Sometimes it is an outright sale, but often it takes the form of the company paying the owner a salary for a specific number of years. If the new owner fails, the company goes down the tube, and your retirement plan goes up in smoke! The more successful the new owner, the more likely you are to get paid.
By the way, delegation is one of the most difficult things you will ever have to do as the owner of a business. It’s especially hard, because the reality is that the person to whom you delegated the tasks initially will not do them with the same efficiency you did.
When that happens, embrace change. “Different” doesn’t necessarily mean poorly done; it just means the task was approached from a different direction. However, like I stated earlier, life happens. Why not try to delegate as best you can while all things are going well?
One last tip: Be sure to have a significant life insurance policy on the owner, again, just in case. If the owner were to disappear for any reason, having extra cash on hand will at least help the business’s cash flow during the transition period.
Tom Grandy has more than 35 years of experience in industry and small business. He has worked as the general manager of a service company and is the founder of Grandy & Associates, a firm that holds seminars, two day workshops and one-on-one consulting for business training. Grandy & Associates also writes articles for numerous trade publications. Tom routinely presents at national and state conventions. For contractors who are serious about profitable growth, we also offer our two-day “Planning for Profit” at numerous locations across the country. Go to www.GrandyAssociates.com or call 800/432-7963.