To protect your family, employees, and customers, your business needs to keep going when you can’t. 

We often hear from our small business clients that they cannot afford to take a vacation of more than one week because the business cannot operate in their absence. But what happens if a serious injury or illness causes an extended absence? There are some things that you can do to improve the chances that your business will survive your long, unexpected absence.

Your first discussion should be with your insurance agent to investigate business overhead insurance. Such insurance will cover part or all of your overhead expenses while you are incapacitated. It is particularly useful for sole owners, but it can also be useful for businesses with multiple owners.

In some situations, a disability prevents you from working but not from being consulted with respect to major decisions. In other circumstances, you might not be able to have any involvement in the business. If your business is structured as a corporation, limited liability company, or partnership, a management structure probably is already in place that provides for the transfer of legal authority in your absence. Even in these cases, however, the management structure will not be effective unless you have actually appointed individuals, other than yourself, as a board of directors and officers.

In addition to having officers and directors, you should consider granting someone other than yourself the authority to sign checks on behalf of the business. While it is possible for a board of directors to adopt resolutions granting signing authority to a new individual, this could cause delays and interruptions in your business operations.

If you are a sole proprietor (an unincorporated business), you may wish to consider providing business authority to an individual through a durable financial power of attorney. With this document, you can specify those actions that the individual can take on behalf of the business, such as signing payroll, entering into contracts, etc. The power need not be unlimited. For example, you can specifically describe transactions that are not within the scope of the power of attorney.

For the sake of your business and your family, develop a detailed job description that describes all of your day-to-day responsibilities. Provide as much detail as possible regarding both the administrative functions that you handle and the scheduling of those functions. The document should also include the names and phone numbers of your key advisers, suppliers, and the like. This will be invaluable to the person stepping into your shoes if you are unable to answer questions and provide instructions.

If there is no one in your business or your immediate family that can handle the responsibilities of running your business, what can you do? Many service providers maintain good relationships with other people in their industry. It is not uncommon, for example, for a small contractor to have an agreement with another contractor to assist each other in managing projects in the event of one of them becoming incapacitated.

Your incapacity does not need to be the downfall of your business. A little planning can protect you, your family, and the value of your business.

Michael P. Coyne is a founding partner of the law firm, Waldheger Coyne, located in Cleveland, Ohio. For more information on the firm, visit: www.healthlaw.com or call 440-835-0600.