It’s easy to think that only good fortune will come your way when you’ve finally got your life all figured out. You have a loving, supportive family, lots of properties and money in the bank, good health, and a booming business. Your future as well as your children’s are secured, so you sleep at night without worries.
But life is unpredictable, and you could lose everything in a blink of an eye. A responsible person, especially someone who owns a business and tons of other assets, should always have a plan B for when a disaster occurs. That said, here are the worst things you could experience that can affect your business:
1. You Went Bankrupt
Owning a successful business doesn’t give you immunity to bankruptcy. If your brand fails to keep up with its competitors, you’ll eventually lose sales and profit. In that case, filing for bankruptcy may be your only option to avoid legal issues from your unpaid debts. You may still keep your business, but if it’s not showing potential for bouncing back, it’s better off closed.
However, if your business is steadily making a profit but is facing tough times due to an economic crisis, you can stay operational until the economy recovers. Just be realistic about remaining open. Avoid taking more risks just because you’re positive that the market will speed up again.
It’s also safe to keep your business running if you’re personally liable for its debts. You can negotiate with your creditors and avoid taking on more debt. Closing your business, in this case, may leave your creditors with no other choice but to go after your personal assets. That is if your business’s assets aren’t enough to cover its liabilities. But if the business isn’t making much money either, you can file a Chapter 7 bankruptcy and eliminate the personal guarantee.
2. You Went Missing
As dreadful as it is to think about, the only logical reason you’d go missing is that someone abducted you. This will put you, your business and your employees, and your family in a lot of trouble and stress.
With no way to trace and contact you, your subordinates will have to fill in your place, except to finalize financial affairs because there’s no one to sign the checks. Unless you have another signatory that also owns significant shares in the business, then no financial transactions can occur.
With regard to your personal finances, nothing can be done. Since no one has the legal authority to act on your behalf, your loved ones won’t be able to access your bank accounts and insurances. If your home is still under a mortgage, it may face foreclosure without you to make the monthly payments. Your spouse, if you’re married, won’t have any power either, even if your mortgage is a joint one. Without your signature, he or she couldn’t change the mortgage or sell the house.
Things may be better if your country has laws allowing family members of a missing person to manage their assets. In that case, your finances and properties will still be functional in your absence. When you’ve been found, you can restart your life after dealing with your abductor.
3. You Went to Prison
It’s not illegal for inmates to own a business outside of prison, as long as the business’s activities don’t violate their judgment and sentence, and the prison’s policies. However, you can’t enter a new contract while in confinement. If you owned the business before going into prison, you can still maintain your ownership provided that your activities don’t violate anything. But you may be closely monitored.
4. You Died Unexpectedly
If you got into a freak accident that killed you, and you had no will nor a succession plan for your business, the intestacy laws of your state will be the ones to determine what will happen to your properties, including your business. That said, it’s important to work with an estate planning attorney as soon as you can, whether you see yourself living for a long time or not. With an estate plan, you can create a will that specifies where your assets will go at the time of your passing.
Dying without a plan for your business allows your family to sell it, or your business partner to take your shares and leave your family with no trust fund or financial security. Your bank may interfere too, and claim your assets and push for bankruptcy.
Hence, no matter how grim these prospects are, consider them possible, and protect your business through insurances and other financial plans. It’s not only your business that’s at stake but your loved ones, too.