The Small Business Administration notes that unexpected disasters cause 25% of America’s small businesses to never reopen. Continuity planning could help prepare an enterprise to withstand a potentially devastating event. Hazards that could leave a New Jersey business closed include flooding and cyberattacks.
According to the NJ Office of Emergency Management, flood insurance may pay for property damage. The Internal Revenue Service website offers tips for preserving business records such as scanning documents and storing copies electronically. Quick access to an insurance policy and financial records could help restore operations once a disaster has passed.
Protecting a business from the loss of an owner
An emergency may result when a business loses its owner or a key partner. Kiplinger’s Personal Finance reports that the death of a sole proprietor or a partner could lead to defaulting on contracts. Without the means to meet financial obligations, creditors or vendors may file a lawsuit to recover unpaid debts.
As noted by CHRON.com, in the event of an owner’s sudden death, an enterprise may pass on to surviving heirs who settle its debts from an owner’s estate. Preventing a business from becoming part of an estate may require instructions for a successor to take control.
Creating a continuity plan for a successor to take over
Some Garden State business owners transfer their enterprise to a trust managed by a chosen trustee. A trustee, however, may not have the skills to operate a business. Owners may create a separate succession plan and train someone to continue running an enterprise. Sharing a succession planning document with an insurance agent and financial institutions may help bring about a smooth transfer.
Agreements may outline how a business should remain open after an emergency. Terms could include management and financial matters for a successor to follow to continue business operations.
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