The vast majority of Small and Medium Sized Enterprises are owner managed and often critically reliant on the expertise and knowledge of the owner. A recent case highlights the importance of providing for a critical event, in this case the sudden passing of the owner manager of an established and profitable company.
The owner and his daughter were the 2 director shareholders, and there were 5 other staff. The daughter however was not involved in the business. Her father was the key contact for suppliers and customers alike; would either trade with the company in the future? The key issue for the daughter, widow and their family, as well as the staff, was ‘what shall we do with the company’? The staff were inexperienced in the business, and there was no natural successor amongst the staff or family. In short, there was no one to manage the company’s operations at this critical time, or at all.
It was clear however that the company was a valuable asset and income stream for the family. On seeking our advice, they decided to appoint an interim manager with a view to consolidating the business in the short term, and to evaluate the options for the family. The daughter, as director, was able to formally appoint the interim manager, who was empowered to operate the business across the board.
Whether by accident or design, the fact that a second director was in place, enabled the family to continue the business and make considered decisions about it’s future in an ordered way. Compare this to a scenario where no second director, officer or shareholder is in situ. With no executive authority, the company’s operations would be curtailed; it could not enter into contracts for goods and services, make payments to suppliers, of salaries etc. In all likelihood, it would be unable to trade validly and risk becoming insolvent very quickly, being ‘unable to pay its debts as they fall due’. The risk to the business, and any value attaching to it, are real.
In either scenario, our specialist advice and expertise are invaluable in assisting in dealing with critical events, and identifying the strategies and resources required. It’s what we do. We also have access to interim management resources via our collaborative approach, should those be required.
Should you or clients wish to know more about the services we offer following a critical event, please contact us for an informal discussion.