It is with a heavy heart that I start my monthly article by taking a moment to honor the recent passing of a treasured member of our small-business community, Diane Berry, owner of Bloomin Crazy Floral in Astoria.
I had the pleasure of getting to know Diane when my business partner, Evie Larson, and I owned The Loft at the Red Building and worked with Diane on many special events as well as the Astoria Downtown Historic District Association Shore Style Wedding Faire.
Diane was a spirited and thoughtful person. I considered her both a valued peer and a friend. She was also a creative and dedicated business owner who was active in the downtown business community and was deeply committed to her business. While her family and employees navigate this challenging time and determine next steps for Bloomin Crazy Floral, I ask you to join me in pausing to reflect on the beauty that Diane’s shop and services have brought to our community and how we can best honor her memory.
One of the most challenging parts of planning for a small-business owner is risk management. It is often easy to get lost in the day-to-day hustle and bustle of the immediate and long-range planning of this sort that can feel doomsday or even futile.
Yet, as we have seen firsthand with this pandemic, risk planning is a key part of business ownership — and succession planning is a key component of that.
Succession planning is the development of a plan of what happens when a business owner does not want to, or cannot, continue to run the business themselves. Having a well-thought-out plan for what happens at this time of transition is critical to ensuring that there is a stable and smooth transition. It can also ease the complexity of the process for families, employees and customers as it gives them a tool to understand your wishes and desires and to navigate the complexities that can arise should the owner be unavailable to help support the transition.
For that very reason, we at the Clatsop Community College Small Business Development Center try to proactively talk about succession planning with small business owners. It is also a key portion of our Small Business Management program curriculum.
During this section of the nine-month course, we ask small-business owners to write a letter to their spouse, family or significant other sharing key details about their wishes should something happen and what plans they have in place. We then encourage these owners to create a succession plan binder (or an electronic repository) that contains critical succession information in it.
It usually includes:
• A copy of their business and marketing plans.
• Most current financial records (profit and loss and balance sheet).
• Key contact list (bookkeeper, accountant/CPA, lawyer, advisers, employees).
• Key accounts and how to access them (including where to securely find logins and passwords).
• A working draft of potential successors or buyers of the business, including their contact information and reasons why they may be a good fit.
• Organizational chart and job descriptions for everyone in the company, including the owner/operator and how they should be leveraged in the need for transition.
• Copies of the key operational documents for the company (employee handbook, operating procedures, marketing plan, etc.).
Once the letter and the binder are completed, we encourage owners to review these with their lawyer and then to create a habit of updating regularly by perhaps scheduling a day in the calendar each quarter or biannually to check in on it.
It is an unavoidable fact of life that risk exists and transitions become necessary. For business owners, sound succession planning, whether strategic or in response to a life-changing event, can save a lot of headaches, heartache and protect the value of the asset should a sale be an option.
The Small Business Development Center offers workshops and specialty advising in this area to help you navigate this and ensure you have a well-designed plan. Email us at firstname.lastname@example.org to schedule an appointment or to learn more. We are here to help.