What happens to your practice if you're not around to run it? Unfortunately, the consequences can be devastating for the majority of practitioners, and ultimately their heirs and successors.
In 1999, I had three heart attacks in succession and almost died. Confined to an Intensive Care Unit (ICU), I attempted to run my book publishing business via a smuggled cell phone until the ICU nurse confiscated it. Cut off from the outside world and worried that I might not make it out of the hospital alive, my greatest fear was that my wife and children would not be able to keep my business going without me.
It wasn't that what I did was so complicated. I just knew a lot of things about the business that they didn't. Almost everything I knew about my business I stored in my head and on notes that only I could decipher. At risk was a thriving enterprise that represented my family's financial security. And the survival of that business solely depended on the answers and information that would evaporate if I died or became incapacitated.
As a practitioner, these answers can be the difference between success and failure for beneficiaries. And if for any reason the practice must be sold, these answers can allow successors sufficient time to sell the practice for what it's really worth. The reality of the matter is, you can avoid bequeathing horror to those who may suddenly be called on to fill your shoes by creating a business organizer that will give successors the answers to questions only you can answer - answers and information about everything from the nuts and bolts of your practice to your wealth of personal wisdom, know-how, and experience.
The bottom line is the solution to this critical problem is very simple: Create a personal business organizer. First, purchase a three-ring binder, a set of eight tab dividers, and a stack of three-hole paper. Create the following tabbed sections: Basic Business Information, Where Things Are Located, Money Matters, How Things Are Done, Important People, Timely Matters, Confidential Information (do not keep this information in the binder), and Advice, Know-how, and Wisdom. As you complete the following, place each item in the appropriate tabbed section.
- List the basics about your practice (include tax ID numbers, telephone numbers, addresses, etc).
- Make a list of what to do first and who to call in case of an emergency.
- Make a list of where to find important documents and valuable items.
- Make a list of your suppliers and vendors.
- List and detail everything that has to do with the finances of your practice.
- Detail what it costs - weekly, monthly, and annually - to run your practice.
- List assets that can be converted to income-producing vehicles.
- Provide details about day-to-day routines, procedures, anticipated trouble spots, and legal, financial, and tax obligations.
- Inventory all business assets. List the current and projected future value of such assets, along with what to hold on to and for how long. Provide thorough information on what should be sold, when it should be sold, and for what price.
- Create a list of outstanding debts. List due dates, payment terms, and amounts owed.
- List all group- and individually-owned insurance policies to be kept in force or to be converted. List premiums, due dates, and benefits. This information is critical if one or more of the covered persons is uninsurable for reasons of health or age. If a policy lapses for nonpayment of premiums or goes beyond the conversion date, the insurance company has the right to refuse reinstatement or conversion. And if such coverage lapses, obtaining new insurance coverage may be impossible or very expensive.
- List all credit cards and lines of credit. Include credit limits, interest rates, which cards or lines should be canceled, and which ones should remain open.
- List who owes your practice money. Include amounts owed and repayment terms.
- List all IRAs and retirement benefits. Include information about survivor benefits, rollover options, and any IRS tax penalties for early withdrawal.
- Make a list of who performs services and maintenance. Include service schedules, warranties, and service contract information.
- Create and maintain a current list of trusted advisors. Include what they do and who should be called fir s t .
- List the location of important papers, documents, and insurance policies.
- Create a listing of business priorities and time related matters. Include short- and long-term plans, goals, and objectives.
- If you have partners in your practice, detail the terms of the partnership.
- Provide information about you. Include everything from your social security number to inside secrets about your business.
- Pick someone who can be trusted with confidential information, then advise them where they can find your various spare keys. Also advise them of the location and contents of any safe deposit boxes, the keys or combination to your safe, and the passwords needed to access such things as voicemail and e-mail.
- Create a confidential list of troublemakers, problem patients, and disgruntled employees and associates. Be sure to detail anticipated problems.
- Devote an entire section that includes all that other stuff you keep in your head, detailing everything. Remember, you don't have to die or get sick to realize the benefits of a business organizer. Let's face it, who wants their golf game, day off, or much needed vacation interrupted by questions like, "How do I load the copy machine?" or "What's the pass code to access voicemail messages?" Although it's not fun, it's necessary.