Business succession planning is crucial to financial and retirement planning while the business owner is still alive. It becomes urgent when a widow needs to take over – or help transition – her husband’s business with no formal plan in place.

Business succession planning … as a widow

When life throws a curveball, all one’s good intentions to plan are not enough. Planning can make challenging times so much easier to weather. Losing a husband who owns and operates a company can be an overwhelming burden when one’s first priority is to grieve.

But it happens. And if it does, first, there are details to care for around the death of a loved one. And, blended with that overwhelm, there are several steps a widow should consider when stepping in to run – or transition – her husband’s business. Their order of urgency will vary with individual circumstances when it comes to a widow and business succession.

Assess the situation. Take stock of the current financial status, including assets, liabilities, cash flow, and ongoing operations. Understanding the overall health of the business is critical to making informed decisions.

Review any continuity plan found in the company. Review such a plan, regardless of how informal it is, and consider the steps defined for various situations, including leadership transitions. Develop a new plan as soon as feasible to ensure the company can continue operating smoothly should further unforeseen circumstances occur.

Seek advice from professionals. Consult with trusted advisors such as attorneys, accountants and financial planners whose expertise can help navigate complex issues around business succession and lessen risk. Their insights into the legal, tax and financial matters related to running the business can prove invaluable.

Review all essential legal documents. These can include partnership agreements, leases, contracts and insurance policies. Knowing the terms and obligations in these documents is vital to managing a business effectively.

Notify all relevant parties. Open communication about changing leadership with key stakeholders – employees, suppliers, clients and business partners – can help maintain trust and stability during a transition.

Evaluate personnel in light of the new situation. Identifying and nurturing talent within the company can help ensure its long-term success. More immediately, however, assessing the skills and capabilities of existing employees during a crucial transition can identify any necessary adjustments to staffing or roles.

Secure the company’s finances. Check that the company’s financial accounts are secure and accessible by reviewing bank accounts, credit lines and financial records. Doing so can safeguard against unauthorized access and potential fraud, especially during early times of distraction and pressure.

Nurture all business relationships. Key clients, suppliers and other stakeholders are vital players. Preserve goodwill and continuity following a business succession by building rapport with them and reassuring them of the commitment to maintaining business operations. It helps instill confidence in the company’s stability.

Stay informed. Find ways to be aware of industry trends, regulatory changes and market developments poised to impact the company. This awareness can help with informed decisions and with adapting to changing circumstances. Most of all, it can help avoid being blindsided at such a vulnerable time.

Care for you. Self-care and well-being are priorities during challenging times – and managing an unfamiliar business can be physically and emotionally demanding. Seek support from friends, family and professional advisors, and delegate tasks when needed. Most importantly, take time for relaxation to avoid burnout when you’d really rather be grieving. 

These first steps can help build a solid foundation for widows forced to take decision-making roles in their husbands’ businesses. Each business succession situation is unique, so actions should be tailored to the needs and circumstances of the business and the individual widow – now or in the future.

The risk of a double loss

A widow who doesn’t play a salient role in her husband’s business risks feeling like she’s suffered a double loss. First, she has lost her husband and life partner, with all the implications of such a relationship. But she has also lost the comfort of knowing her family’s financial future is in trusted hands. 

While quickly taking the initial steps listed above is essential, a widow may also feel the urgency of announcing her intentions for the business and what role she might play in that scenario. Intentions can take many forms, including:

  • Selling the business or its assets 
  • Shutting down the business 
  • Taking on a caretaker role as new in-house or outside management is identified 
  • Buying time by acting as a bridge until other family members or key employees are able or available to take control 
  • Taking complete control of the company 

That decision will depend upon so many variables, such as:

  • How involved the widow is in the business and her level of confidence
  • The role the business plays in the husband’s and the family’s legacy
  • Whether the husband was able to indicate his preferences before passing
  • Whether the couple has adult children or children reaching maturity
  • The widow’s relationship with staff and employees
  • Whether any offers are made on the business or its assets
  • The widow’s age

At WH Cornerstone, we know life can throw you a curve ball at any time, whether you’ve made plans or not. Losing a spouse who is a business owner is a curve ball with profound consequences as it disrupts your personal and financial life all at once. To make such occurrences less devastating – and hopefully more manageable – we work with clients to prepare for many of life’s unexpected challenges. We call it Curve Ball Life Planning™.

We have the skills to help whether you need support preparing for or reacting to an event that leads to business succession. We can facilitate discussions and convert their output into sound preparations in case an action plan is required. 

And should the death already have occurred; we know you will be tasked with making rational strategic decisions in a business succession while managing powerful emotions. Hopefully, you will have support from children, relatives, close friends, business associates and professionals. We know how to provide you with the support and clarity of thought required at such a crucial time.

For help with this process, schedule a call with us. We’re here to help.

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