In 2021, the U.S. Small Business Administration reported over 362,000 small businesses were operating in Oklahoma. A common formation for small businesses is a partnership.
When running a business with a partner, it is important to plan for all eventualities, including the unfortunate event of a partner’s death. While this may be a difficult subject to broach, taking proactive steps to safeguard your business can provide stability and continuity during challenging times.
Create a partnership agreement
You must establish a clear and comprehensive partnership agreement that outlines the roles and responsibilities of each partner. The details must include what will happen in the event of a partner’s death. There should be a succession plan that identifies potential successors within the organization or establishes criteria for seeking external candidates. Be sure to keep information in the plan updated.
Obtain life insurance
Consider obtaining life insurance for each partner as a financial safety net. It can provide funds for the business’s continued operation in the absence of a key partner. Make sure to regularly review and update policies to reflect the evolving needs and growth of the business.
Train key personnel
Distributing knowledge and responsibilities across team members can prevent a significant knowledge gap in the wake of a partner’s death. This cross-training approach ensures that essential functions can continue seamlessly, reducing the risk of operational disruptions.
Safeguarding your business in the event of a partner’s death involves proactive planning. Taking steps now can facilitate a smoother process to ensure the continuity and stability of your business during challenging times.