Preparing for 'The Worst'.....

[Kath y]

Hello folks.

I am a sole trader in my 50s, running a small but successful online retail business as the only year-round member of staff.

The issue I need to get my head around is that no-one else knows all the ins and outs of running my business, and as I am making a good living and saving well for my retirement, I don't want to employ someone and train them up, when I can manage the workload myself, especially as they could still leave at any time and I'd be no further forward, just financially worse off.

Problem - if I were to die suddenly, what the hell happens to my business? I have one adult child (with their own career and responsibilities) and absolutely don't want to leave them lumbered with premises, £100K of stock, contracts, tenancies etc, but as yet I have no plans in place, as I honestly wouldn't know where to start.

For anyone else in a similar situation, ie running as a sole trader / sole employee rather than a limited company with several directors etc, how did you set plans in place for the worst case scenario?

I may of course live a long and happy life and sell my business for a lovely lump sum, but nothing is guaranteed in life apart from death, so I need to face all possibilities and would really appreciate hearing how other people have dealt with this subject please? Thanks for reading.

 

[japancool]

As a sole trader, your business - stock, tenancies and whatnot, become part of your estate if you die (as far as I know).

Can you document your business? What you do, how you do it, where you advertise, how you fulfil orders, passwords and whatnot to log in to your systems etc.

 

[Kath y]

As a sole trader, your business - stock, tenancies and whatnot, become part of your estate if you die (as far as I know).

Can you document your business? What you do, how you do it, where you advertise, how you fulfil orders, passwords and whatnot to log in to your systems etc.

Thanks Japancool, I've tried to get my head around some aspects, ie 'emergency' instructions like how to log in to the back end system, add a 'closed due to unforeseen circumstances' message onto my site etc, phone numbers for my accountant, landlord etc, but it feels like only just scratching the surface.

I have wondered if I should assemble some sort of 'for sale' particulars as if I was selling the business, and keep that on hold somewhere, so that if I were to ship out, either my daughter or whatever unfortunate person has to sort out my affairs has a slight head start with finding a buyer, but this is just an absolute stab in the dark!

 

[Clinton]

I may of course live a long and happy life ...

Good luck.

(may)... sell my business for a lovely lump sum.

You've got a better chance of winning the lottery. Go buy a ticket today.

What you have is a job, not a business. These are almost impossible to sell and that's when you're alive and able to provide a full handover and training to any potential buyer.

Once you've snuffed it, nobody will want to touch the "business" with a bargepole. Whoever is dealing with your affairs will be lumbered with selling everything off at firesale prices.

After paying accountants and lawyers to deal with the paperwork, they'll probably end up with a negative figure.

I have wondered if I should assemble some sort of 'for sale' particulars as if I was selling the business, and keep that on hold somewhere, so that if I were to ship out, either my daughter or whatever unfortunate person has to sort out my affairs has a slight head start with finding a buyer...

This is based on some serious misconceptions about how businesses are sold. But you are not alone. Most small business owners think that their business is worth "something" and that "someone" would be willing to pay money to buy it.

 

[japancool]

I have wondered if I should assemble some sort of 'for sale' particulars as if I was selling the business, and keep that on hold somewhere, so that if I were to ship out, either my daughter or whatever unfortunate person has to sort out my affairs has a slight head start with finding a buyer, but this is just an absolute stab in the dark!

Grab a suitable guinea pig, such as a willing family member, and sit down with them to "train" them to run your business, and work out what you need to document to allow them to do it.

Start at the very basics.
* This is how orders are received.
* Do this to send the orders out.
* This is how I find customers.
* These are the accounting tasks.
* Here are all the contracts and leases.
* These are the key people you need to contact.

Etc. etc. It will be a long job, but the sooner you start, the sooner it'll get done!

 

[japancool]

You've got a better chance of winning the lottery. Go buy a ticket today.

I bought a ticket today. This time next year, Rodders!

 

[Kath y]

Good luck.



You've got a better chance of winning the lottery. Go buy a ticket today.

What you have is a job, not a business. These are almost impossible to sell and that's when you're alive and able to provide a full handover and training to any potential buyer.

Once you've snuffed it, nobody will want to touch the "business" with a bargepole. Whoever is dealing with your affairs will be lumbered with selling everything off at firesale prices.

After paying accountants and lawyers to deal with the paperwork, they'll probably end up with a negative figure.

This is based on some serious misconceptions about how businesses are sold. But you are not alone. Most small business owners think that their business is worth "something" and that "someone" would be willing to pay money to buy it.

I'm not much of a gambler myself Clinton, but thanks for your input.

Perhaps I'll just leave a packet of firelighters and a box of matches in my will then.

 

[Kath y]

Grab a suitable guinea pig, such as a willing family member, and sit down with them to "train" them to run your business, and work out what you need to document to allow them to do it.

Start at the very basics.
* This is how orders are received.
* Do this to send the orders out.
* This is how I find customers.
* These are the accounting tasks.
* Here are all the contracts and leases.
* These are the key people you need to contact.

Etc. etc. It will be a long job, but the sooner you start, the sooner it'll get done!

Thanks, I've begun writing a 'manual' several times, but things change all the time with the website software etc so it's felt like a bit of an impossible task! I should get back at it. Thanks very much for your time.

 

[Clinton]

Do the manuals etc. They'll be useful if you ever end up unwell and want to try selling the business. But they won't be of any use if you aren't around to provide handover.

I strongly recommend you buy a good book or two on Exit Planning and/or do some investigation into what is actually involved in selling a business. This will take a few days or WEEKS of research. But it'll stand you in good stead.

Then, if you ever do want to get out of the business, you'll be better prepared and your chance of selling improves from about 6% (industry stats for micro businesses like yours) to about 30%. But you need to do that research NOW and make the necessary changes NOW in order to increase your chances of completing a deal later.

 

[Joseph K]

Hi Kath y,
If I was in your situation I would do what has been suggested.
I would look for someone keen and train her/him to run the business.
I hope that helps.

 

[The Byre]

I am a sole trader in my 50s,

if I were to die suddenly,

You are not going to die suddenly so stop fretting over nothing! I am in my 70s and I can assure you that dying is the last thing I intend to do! I do not have the time nor do I have the inclination to die any time soon - I have too much to do!

You have got at least 30 years of active and healthy life ahead of you - more if you don't smoke, vape, eat processed food or soft drinks or quaff down too many wines and shorts.

What's with all this morbid drivel about dying on this forum lately? What with writing wills, avoiding death duties and now this nonsense! Come on people, snap out of it and get some bloody work done!

 

[Fagin2021]

You are not going to die suddenly so stop fretting over nothing! I am in my 70s and I can assure you that dying is the last thing I intend to do! I do not have the time nor do I have the inclination to die any time soon - I have too much to do!

You have got at least 30 years of active and healthy life ahead of you - more if you don't smoke, vape, eat processed food or soft drinks or quaff down too many wines and shorts.

What's with all this morbid drivel about dying on this forum lately? What with writing wills, avoiding death duties and now this nonsense! Come on people, snap out of it and get some bloody work done!

When I die, I want to go like my grandpa. Peacefully, in his sleep. Not shouting and screaming like his passengers.

 

[pentel]

I strongly recommend you buy a good book or two on Exit Planning

Which books would you would recommend @Clinton ?

There is a lot of info on your website but always worth reading more.

 

[GraemeL]

Hello @Kath y . I see you asked a very similar question back in 2020, so its clearly something that is a worry to you.
Suggest you attempt to sell your business NOW and then in the deal agree stay on as an employee and continue to run it. That way you will soon find out if its sellable and have no worries.

 

[Clinton]

Which books would you would recommend @Clinton ?

There is a lot of info on your website but always worth reading more.

100%. I link out a lot in my articles. Hopefully, readers will find those links useful.

Which books would you would recommend @Clinton ?

Here I'm going to plead ignorance. When I have a week or two to spare, I'll buy a whole load of Exit Planning books, read them all and write some reviews.

In the meanwhile, Kerri Salls has done some good stuff in the mid-market. Mike Finger is relatively new to exit planning but he has some decent material for the really small businesses. And it's always worth browsing through David C Barnett's awesome free videos in YouTube whatever the size of your business. (Disclosure: All of them are good friends of mine and have written me glowing testimonials in LinkedIn and elsewhere ....so of course I think highly of them ?)

 

[japancool]

You are not going to die suddenly so stop fretting over nothing! I am in my 70s and I can assure you that dying is the last thing I intend to do! I do not have the time nor do I have the inclination to die any time soon - I have too much to do!

I take it you don't have a predilection for viewing sunken ships?

 

[JEREMY HAWKE]

I am in the same position as the OP

I have 3 very clever daughters and they will be able to sort it out with no plan in place
It will be character developing for them

 

[BobzYourUncle]

Similar situation. Daughters have been taught what to do. Sell the leasehold or put together a tenancy agreement. Should they both want some kind of income. Or sell it. Both have professional careers luckily one of them is good with money and the other one is good with legal stuff. I trust they will both come to some amicable arrangement. All our other stuff like the designer handbags and nice watches.. well that's another matter. They already said (jokingly i hope) It will be pretty much be on Dickensons Real deal or cash in the attic ?

 

[Gettingthereslowly]

Kath y,

Its a good question, and something I need to address too.

My business is a bit bigger/has assets, but I still wouldn't want to leave a pile of mess for a loved one to try and sort out.

I intend to write a short list of things to check off, give the name of a couple of trusted advisors; tell them not to worry about squeezing every last pound out; do the right thing by the staff; don't even attempt to run the business...its hard work, and I supposedly know what I'm doing! Don't waste too much time trying to sell the business....as others have stated here, small/micro businesses are hard to sell/get any deal over the line; you will make mistakes; don't worry, its only MY money.

 

[Lisa Thomas]

FYI I just stumbled across this on LinkedIn:

The Systemised Business | LinkedIn

The Systemised Business | 20 followers on LinkedIn. Supporting business owners to create a business that runs without them. | Supporting business owners to create a business that runs without them. If you're looking to scale, sell or step away from your business, then you need a clear strategy...

www.linkedin.com

 

[Lisa Thomas]

The Systemised Business | LinkedIn

The Systemised Business | 20 followers on LinkedIn. Supporting business owners to create a business that runs without them. | Supporting business owners to create a business that runs without them. If you're looking to scale, sell or step away from your business, then you need a clear strategy...

www.linkedin.com

 

[Lisa Thomas]

Sorry it doesn't seem to want to let me share the link. I have a contact who deals with putting systems in place to help with your exact concerns. DM and I'd be happy to introduce you.

 

[tony84]

You probably need to look at some sort of income protection insurance in case you are unable to work.
You might also want to have a Will in place.

In terms of everything else, have a conversation with your son.

Realistically the business would probably stop trading overnight. There might be a few chargebacks as you are unable to provide the items paid for.

The only bits that matter are:
1) Access to the business, presumably that will be your username/password.
2) Access to your computer.

The rest (ie the bank account) and any credit you have will sort itself out.

 

[Newchodge]

Sorry it doesn't seem to want to let me share the link. I have a contact who deals with putting systems in place to help with your exact concerns. DM and I'd be happy to introduce you.

The link works, even though it appears to be permanently loading. Just click on it.

 

[Kath y]

Hi Kath y,
If I was in your situation I would do what has been suggested.
I would look for someone keen and train her/him to run the business.
I hope that helps.

Thanks Joseph but I want to avoid paying and training staff as I'm coping fine with the workload and reaping the rewards for myself. If I employ a manager to learn the ropes, then all the savings I'm squirreling away would end up going on their wages instead, making my whole business less worthwhile for me.

 

[Kath y]

You are not going to die suddenly so stop fretting over nothing! I am in my 70s and I can assure you that dying is the last thing I intend to do! I do not have the time nor do I have the inclination to die any time soon - I have too much to do!

You have got at least 30 years of active and healthy life ahead of you - more if you don't smoke, vape, eat processed food or soft drinks or quaff down too many wines and shorts.

What's with all this morbid drivel about dying on this forum lately? What with writing wills, avoiding death duties and now this nonsense! Come on people, snap out of it and get some bloody work done!

Thanks for the pep talk. I very much hope that's true, it's just I've lost several close friends in recent years, all in their early fifties, so I feel I'd be foolish to stick (keep!) my head in the sand. But yes, cut the plonk, eat the veg, and think positive, definitely!

 

[Kath y]

Hello @Kath y . I see you asked a very similar question back in 2020, so its clearly something that is a worry to you.
Suggest you attempt to sell your business NOW and then in the deal agree stay on as an employee and continue to run it. That way you will soon find out if its sellable and have no worries.

Thanks Graeme, I have been procrastinating ever since!
One of our suppliers has already expressed an interest in buying me up, and while they may be willing to pay me a reasonable salary to continue managing, that would be the end of it, whereas as a sole trader I'm currently taking all the profits as well as the salary, so I'd stand to lose a great deal by selling out. I just need a crystal ball so I can keep making hay while the sun shines and still dip out before the grim reaper comes knocking at Goods In. ?

 

[Kath y]

I am in the same position as the OP

I have 3 very clever daughters and they will be able to sort it out with no plan in place
It will be character developing for them

Yeah I think I'd be more relaxed about it if I had more than one kid to share the burden. Easier to muddle through between them hopefully, but I wouldn't feel right leaving my one and only daughter with it all to sort out alone, if I can avoid it.

 

[Kath y]

Kath y,

Its a good question, and something I need to address too.

My business is a bit bigger/has assets, but I still wouldn't want to leave a pile of mess for a loved one to try and sort out.

I intend to write a short list of things to check off, give the name of a couple of trusted advisors; tell them not to worry about squeezing every last pound out; do the right thing by the staff; don't even attempt to run the business...its hard work, and I supposedly know what I'm doing! Don't waste too much time trying to sell the business....as others have stated here, small/micro businesses are hard to sell/get any deal over the line; you will make mistakes; don't worry, its only MY money.

Great advice, thanks very much for sharing your take on the same situation