As a business owner, you started out doing everything all by yourself. You were the accountant, the salesperson, the CEO, and the marketer, but as your business grew, it became harder and harder to handle all the responsibilities. You needed help. The thought of putting your business responsibilities in the hands of someone else just to lighten your load was almost sickening but you had to do it in order for your business to grow and be the success it is today.
Giving control over certain decisions in your business is going to be difficult for any business owner. However, relinquish complete control over the daily operations of your business and the overall long-term strategy of it is unfathomable. As a business owner, you don’t want to have to think about that but at the end of the day, it’s something you will eventually have to do so that your business will at least fall into the hands of someone you know and trust. Read this post to learn why your business needs a power of attorney along with extra protection.
What’s Your Best Option?
Well, you have a couple. Your first option is to sell your business. Some business owners will sell their business while they are still alive and capable of making their own decisions. The thought of someone else making their business decisions was just too much to bear. It’s not a bad decision though… you have to think about it like this. Your business is pretty much your life savings for retirement; when the time is right, you sell it and live off the money you’ve earned.
Your second option is to keep running your business down till the very end! In your mind, your business is your life and the thought of doing something else is just unsettling, therefore, you stay occupied in our business and just let your estate plan takes care of the worrisome things like transferring of control and ownership… you figure, once you’re not on this Earth anymore, it’s not your problem to worry about.
Some people might look at that as selfish or irresponsible but whether it’s selfish or irresponsible is completely irrelevant… you know why? Because whether you go for option one or two, there is still a huge gaping hole unfilled. Both of those options are ones where you are prepared and have plans in place for the end. The unanswered question is what happens to your business if something happens to you before you’re ready or before you’ve made proper arrangements?
Why Your Business Needs A POA
The answer to the question of “what will happen to your business if something happens to you too soon?” is acquiring a POA before something does happen. Find a reputable business lawyer as a precautionary measure.
What Is A POA?
A POA is a legal document that appoints someone (an agent) to make decisions on your behalf. Now, your POA isn’t someone who is going to provide legal representation, they are just acting on your behalf in the realms of what a POA grants.
Drawing up power of attorney can be as simple as a free download; the part you want to make sure you get right is who you select to act on your behalf. Because it’s your business, you want to make sure you select someone who knows you and your business and will make decisions on your behalf with good intentions for you and your business.
The POA can lay out very specific terms for your agent that makes it effective only in extreme cases, for example, in the event you become incapacitated. As the business owner, you need to make very clear what they will be authorized to do.
What Would Be Deemed As Incapacitated?
A business attorney is written to only become effective when the business owner becomes incapacitated. What that means is only when the business owner is unable to run or manage their business, will their agent act on the business owner’s behalf. A business owner can become incapacitated due to:
- Old age
- Mental illness
- Untimely accident
To friends and family, it might be very clear that the business owner is incapacitated but ultimately, that diagnosis can only be made by a trained and certified physician.
Get Additional Protection With A Succession Plan
Your business definitely needs a business POA but for the continuation of your business, you’re going to need a succession plan. Whether you plan on selling your business or passing it down in your estate plan, a succession plan needs to be in place. It answers the questions of if you die, who will own the business? Who will handle the day-to-day operations?
A succession plan is a process of creating future leaders. More specifically, the plan builds leaders to replace former leaders when they leave. It’s a process that goes hand-in-hand with your POA and your estate. You’ll have successors and they need to know the business inside and out and make sure they’ll run the business the way you would want them to. You want to make sure they understand your vision. If you are unsure about any of these processes but are ready to take the necessary steps to protect your business and prepare for the future, consult with your local estate planning law firm.