Growth April 5, 2016 Last updated September 18th, 2018 2,006 Reads share

Small Business Owners: What Will Happen to Your Business if You Die?

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While small business owners most people tend to be good at putting into place business continuity plans for various eventualities, many of us don’t really stop to consider that it might be a good idea to have a plan in place for if we were to die unexpectedly. Obviously, this is not a nice thing to think about, but it can actually be quite important.

Even if your expectation is that your business would just cease to be without you, who will wrap things up and inform your customers? Alternatively, you might expect a partner or member of your team to take over the business in your absence, but would it actually be possible for them to do this easily as things currently are?

Coming up with a plan for this albeit unlikely eventuality will reduce stress for anybody left behind, give you peace of mind, and may even reveal some operational or strategic weaknesses in your current business processes that you could benefit from addressing anyway. While of course we all die at some point, if you are in good health and of working age then it happening anytime soon shouldn’t be a likely event

Here are some things to think about when looking at your plan for your business in the event of your death:


One of the first things that people will need to be able to sort out easily if you die is the company’s finances. Money from the business may even be needed to cover your own funeral expenses and things like that, so if you intend to leave your estate to your next of kin along with any assets the business owns, then this really does need to be planned and set out. The smaller your business, the more likely it is that money from the business may be needed quickly by your family, but also that nobody else has access to your financial records.

Of course, it is not just about the money that is yours – somebody will need to be able to pay outstanding invoices with suppliers, and handle any orders that are in progress. How you do this and who you want to involve may vary depending on who you have in your business or family, but you do need to consider it. You can also take this opportunity to think about more personal financial matters relating to death like life insurance or final expense insurance. Having these sorts of policies can make accessing business funds less urgent for your family.

Shut Down the Business?

If your small business is dependent on your skills, then it is logical that in the event of your death it would cease trading. However, if this is not the case and you have people who could continue the business in your stead, you could pass the business on to someone to either run themselves or sell. If you plan to shut down, you still need a plan to settle any invoices, notify customers and officially close down the company. Even things like your website will need to be handled – will you simply shut down the site, or is there a message you’d like posted on there for a period of time?

You can still think of things that might be good for someone to know in this eventuality – for instance, is there a competitor you like who you’d prefer your client list to be passed over to? Are there any tools or other business assets you’d especially like a specific person to have?

Continuing the Business Under New Ownership

If you plan to keep going, a more thorough business continuity plan needs to be made, and legal issues around who inherits the business need to be covered. You may be in a complex situation where you want certain major things, like ownership of premises, to go to your next of kin, but ownership of the trade name and the right to carry on the business to go to your second in command in the company. Look at any potential complexity and make sure the people you are considering are aware of your wishes and are happy with them.

It is a good idea to speak to a lawyer when determining what will happen to your business after you die.  The law varies depending on the state that your business is operating in, and the mitigating circumstances surrounding the reason why you need a “continuity of existence” will also determine what happens.  Wherever possible, it is best for a business owner to have plans in place in advance to make the transition as smooth as possible.  Not only can this lead to fewer headaches for those involved, but it is also more likely to cost less than if the new ownership was disputed at a later date.

Business continuity itself means making sure that your customers continue to receive a good service during the transition period between you and your successor having a full handle on the business. How easy can you make this by doing things like storing all work and records using a cloud based system, so nobody has to find a way into your own personal files to know what is going on? Do you have a lot of information about your customers that is all in your own head rather than in records other people could access without you? Making sure your chosen successor is as well equipped as possible to keep running the business smoothly even in this kind of stressful situation will help them succeed, and keep your business and legacy strong.

Nobody likes to think about negative scenarios, least of all ones where they themselves die. However, by having a clear and decisive pan for what will happen in your business if this does unexpectedly occur will make this unpleasant situation far less of a strain on your family, team and clients.

Images: ”Grungy photo of feet with toe tag on a morgue table /


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Boris Dzhingarov

Boris Dzhingarov

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