You Will Die: Business Planning for Unexpected Death by Dallas Romanowski

Death is the only experience that all business owners share. Few business owners like to talk about this fact, and even fewer like to plan for this inevitable outcome, especially if they don’t plan on dying anytime soon.

Though it may seem morbid, it is crucial for business owners to plan their death well in advance of being ready. If you don’t, your business and legacy could send shockwaves through the lives of the people you care about, as did a fictional but representative business owner.

Death comes early

Darnel Peters had everything he ever wanted – a large, loving family; a locally renowned logistics company that continued to grow; no obvious health problems apart from an occasional twinge in the back, which he attributed to an active lifestyle and aging body.

But after a routine check-up, he learned he had stage 4 pancreatic cancer. His doctors told him he might have 12 months to live, but only if he underwent extremely aggressive chemotherapy, which he knew would prevent him from running his business.

Darnel’s business success was largely due to him. He had good managers but no one to run the business in his absence. He had only just begun to consider converting his sole proprietorship into an S corporation, on the advice of his advisers. And Darnel’s post-retirement plan was non-existent as he assumed he would not leave for the next 20 years.

He shared the shocking news with his family and trusted business advisors. His brother and financial adviser, Stephon, felt compelled to do whatever it took to give Darnel as much family time as possible. He started by asking his brother what he wanted to do with the remaining time.

Prioritization in the face of death

Darnel was placed in an impossible position, but one he couldn’t just ignore. He was torn between spending as much time as possible with his family and managing his business affairs, since his family’s lifestyle depended entirely on him.

His silver lining was that he had a trusted team of advisors, including his brother. Always the consummate leader, Darnel shared the three things he wanted to do with the time he had left.

1. Be physically with his family as much as possible.
2. Do something that would give them the money they needed to live comfortably after his death.
3. Protect its employees and prevent the company from collapsing.

Darnel’s team of consultants struggled to find someone who could run the business. Before his diagnosis, Darnel took out a $2 million life insurance policy that would give his family a few years of breathing space. And his shop had flirted with buyers before, but never anything formal. Darnel urged his team to do whatever it takes to fulfill his plans.

No plan, no picture book ending

Darnel died nine months after his diagnosis. During this time, his team of consultants could not find anyone to take over the reins of the company. When prospective buyers investigated the company, they found that it relied entirely on Darnel’s presence to sell it successfully. The best offer they received was a paltry $1.5 million, which the consulting team accepted at Darnel’s request to do their best.

With $3.5 million between the sale and the life insurance payout, Darnel’s family survived but had to sacrifice many of the benefits of their lifestyle. His business and employees weren’t so lucky. The buyer stripped the company of its books and laid off 95% of its workforce.

How to reduce the risk of facing this fate

Death can come unexpectedly and destroy your life’s work. However, there are ways to mitigate the risks that an unexpected death can pose.

1. Know what is important to you. Ask yourself, “What’s most important to me?” This is the first, and perhaps most important, step in planning for a successful future.

2. Start planning before you are ready. Time is one of the most powerful weapons you have in your planning – it is also finite and difficult to gauge how much you have left. Consider building both an estate plan and a business continuity plan immediately in writing if you have not already done so.

3. become irrelevant A business that relies on you often dies with you. Commit to training or hire the next level of management to run the business in your absence.

The prospect of dying without a plan can be frightening. It’s easy to dismiss it and think it will never happen to you. However, it can also force you, your business, and the people you care about into a situation that could be avoided with proper planning.

We strive to help business owners identify and prioritize their goals related to their business, their employees and their families. When you’re ready to talk about your goals for the future and gain insights on how to achieve those goals, we’d love to sit down and talk with you. Please do not hesitate to contact us at your convenience.

Welcome to the Cornerstone exit planning newsletter. Twice a month we give you practical tips for planning your company exit. Contact us with any questions or if you would like to start the planning process. Enjoy!

chip mayo and Robert Romanowski

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As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and exit planning tools.

The Cornerstone team is made up of former C-level executives, successful entrepreneurs and consultants who have unmatched experience in delivering advanced, customized, results-driven solutions for business leaders. As a member of the Business Enterprise Institute (BEI), Cornerstone is an authorized distributor of BEI’s content and exit planning tools. We developed the Performance Culture System™ to help clients implement best practices and achieve peak performance across their organization. For more information, visit, call (910) 681-1420, or email [email protected].


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