Cash is king! Never a truer word was spoken for most businesses. Even under the best of circumstances, maintaining positive cash flow can be challenging.
Think about this: How would your disability…or death…impact your business with regard to its cash needs? Do you have sufficient cash reserves or access to cash to sustain your business until it can be sold on favorable terms?
Not sure? Consider the following questions:
Would your loss to the business affect contracts? Specifically, might your loss accelerate debt or reduce credit lines?
- Would your business continue to generate enough cash to support you and/or your family?
- Would your absence trigger a drop in sales, thereby creating liquidity problems?
- Would your suppliers continue to ship under existing terms, or would they demand that your business substantially pay down receivables?
- Given that key employees might leave due to your loss, would your company be able to pay bonuses or other forms of stay incentives?
- Would your business be able to afford your replacement?
- Would your death trigger estate tax issues?
These are critical questions that every business owner needs to satisfactorily address.
If you’re uncomfortable with some of your answers, it might be to your benefit to revisit your company’s “Business Continuation Plan”…or…to create one.
Remember, Greater Madison is home to an excellent selection of legal, accounting, and other professionals who stand ready to assist you.