Unclaimed Property Consulting

If you are wondering what I've been up to lately, I am now with Barganier and Associates, a leading firm on unclaimed property consulting for Fortune 500 companies. I am now blogging for Barganier.

Business Succession Planning

My client list contains many businesses that are family-owned and operated with plans to leave the business to the next generation. There are many issues to consider if you plan on doing this in the future.

I'll leave the legal aspects to a post some time in the future. But for now, if you plan on leaving your business to a family member, keep these things in mind.

1. Incorporation Have you incorporated? Sole proprietorships legally die when the owner dies. They are not good vehicles to hold the business interests. So first, consider incorporating your business.
   
   
2. Separate Business and Personal Finances You will want to make sure that all your personal and business expenses stay separate. Many people will mix the finances for various reasons, mostly because of ease. For more than succession planning, this is not a good idea - tax and corporate veil protections are additional reasons not to mix personal and business finances.
   
   
3. Minimize Debt If possible, you will also want to minimize the debt load of the company. Your family members will appreciate getting a business without a lot of debt. Furthermore, you are probably personally guaranteeing much of this debt. When you leave the business, you will not want to worry about the business defaulting and these creditors coming after you.
   
   
4. Involve The Family Member You'll also want to get the family members involved as soon as possible. Make sure they are on board with the idea of taking over in the future. Then you will want to train them in as many aspects of the business as possible. You will want to introduce them to important clients and vendors and let them develop their own working relationships with them. You will want the employees to trust the incoming family members so that when they eventually do take over, there will be no interruption in operations.
   

For now, though, these are some practical steps that you should be taking to make sure that the business will be suitable for passing along.

Hire Slowly, Fire Quickly

When your company is going well, you probably decided to hire someone. You collected resumes, sifted through them to interview a few people and then made a decision, after maybe one or two interviews. You may or may not have checked references. Now, you have found out that the new employee just does not fit with your organization and it is time to get rid of them. The saying "hire slowly, fire quickly" and the many variations of it are rooted in some basic HR strategies.

Hire Slowly
By spreading it over several days or even weeks, you allow yourself to really think about what you want in an employee. Do you want someone that will challenge the status quo or go along with it? Is organization an important aspect of the job? How difficult are you, as the boss, to work with? Do you need someone that will keep you in line and on task?

Taking the time to learn about your potential new employee is worth its weight in gold. Checking references is a good thing, even if all you get is a confirmation that they did in fact work there during the dates stated on the resume or application. Sometimes, you'll get a past employer to speak about the quality of work and the applicant's personality. You can learn both good and bad things about the applicant.

Fire Quickly
Once you have determined that an employee is not the best fit or has done some type of misconduct worthy of firing, you should do so quickly. Don't wait around for weeks or months, expecting the employee to suddenly start producing better quality work.

However, there are a few things to remember:

1. Don't react emotionally. If something happens unexpectedly that requires immediate termination, take a few moments to collect yourself and to document what the employee did wrong. It may even be best to send the employee home for the day and do the termination the next day.
   
   
2. Consult with your business attorney. There are many things to consider when terminating an employee. What forms do you need to provide to the terminated employee? Do you need to offer any kind of severance package? You do not want to set yourself up for later liability because you handled the termination badly.
   
   
3. Mentally Rehearse the Meeting. It is best to do terminations in person. Just like you don't want to be broken up with on a Post-It note (see Carrie in Sex and the City), have the guts to do the dirty business in person. However, before you are in the meeting with the about-to-be-terminated employee, know how you want the meeting to go. Anticipate questions - last paycheck, health insurance, unemployment, and severance. And know how you will respond to each question.
   
   
4. Know what your employee had access to. Remember to collect the keys, passwords, company property, and such upon termination. Know how to turn off their access to company servers. Know which customers need to be notified. If they had a company credit card, make sure to cancel it immediately. In the meeting, ask the newly terminated employee for as much information as you can. You can even ask them, "is there anything that I need to know about your job?" Yes, even at termination, most employees are willing to provide the information if you handle the situation respectfully.