Mary Beth Simon (00:00):
One thing that I encourage people to do is to take the perspective of this plan, needs to be able to be used by someone who knows nothing about your processes or what you do. And that really gives the best context for what needs to be included, because we make a lot of assumptions on what people know about us or how easy the process may be. And it may be easy to us, but it's not easy to those who do not do what we do on a regular basis.
Susan Boles (00:37):
What would happen if you had to step away from your business for a few weeks? What about a few months? Would everything come crashing to a halt? Or would there be a clear path forward for someone else to pick up the baton and keep your business going? I'm Susan Boles, and you're listening to Break The Ceiling, the show where we break down unconventional strategies you can use to save time, boost your profit, and increase your operational capacity.
Susan Boles (01:05):
Being resilient means being able to bounce back from adversity, to pivot and reset after a change, but you only become truly resilient if you examine where your risks are? Where could hiccups happen? What could go wrong? And then you figure out a plan for how to handle that scenario if it really does happen. We do this all the time with cashflow projections, with strategic planning in our businesses, but we rarely plan for what happens in the absolute worst case scenario of you not being able to run your business. As a business owner, you are a risk. You built your business, and most likely it depends on you in some form or fashion to keep it going.
Susan Boles (01:55):
Even if you have a staff or other people that do a lot of the day-to-day work, they still look to you for direction, for leadership. So if you suddenly aren't there anymore, what happens? That's a pretty big change when the founder or the owner suddenly isn't there for whatever reason. Could you bounce back from that? And how would you keep the trains running? That's what contingency planning is all about. Planning for the contingency of what happens to your business and to your personal business if you need to step away for a while or just flat out can't run the business.
Susan Boles (02:33):
And my guest today is an expert in planning for contingencies. Meet Mary Beth Simon, the founder of Niche Partnership Consulting. She helps business owners create plans for transition and for crisis. She wants to help business owners teach those who depend on them so that they're prepared to step in if something happens. Mary Beth and I talk about who should be creating contingency plans, what it looks like in the real world when you have to actually execute your plan, and how important your preparation is when it comes to ensuring your business can survive a big change. Hey, Mary Beth, thanks for being here today.
Mary Beth Simon (03:12):
Hi Susan. Thanks so much for having me.
Susan Boles (03:15):
So we're kind of talking about change and being prepared for change and managing change, but a big part of being prepared for change is being prepared for contingencies, being prepared for things to go wrong, for the worst case scenario. And because that is what you do, tell me about contingency planning, because I think a lot of our listeners don't necessarily understand what it is? Why we need it? So give us all of that.
Mary Beth Simon (03:47):
Sure. So in the simplest terms, it comes down to a process of organizing the most important documents and processes that we have, and then identifying a second in command and then training them to step in for us in an emergency. And when we assess what we have in place, then we can identify the gaps and resolve those gaps and then think through who would be the best person to train and then move forward and train them for what they need to know when something happens to us.
Susan Boles (04:27):
So you do contingency planning for individuals, for business owners. From an individual standpoint, what does contingency planning mean? Because I don't think a lot of people understand what that is.
Mary Beth Simon (04:42):
Sure. So for individuals, what I do for individuals is really the foundation of what I do for business owners. But with business owners, we just add on some extra elements. So when we start with individuals, we start with all of the basics that apply to everyone. So we gather all of their important documents, their birth certificate, everything about their bank accounts, including how the accounts are registered, their credit cards, all photocopies of everything that's in their wallet and their important documents, like their passport, social security card, all of that, their health insurance policies, their investments, their insurance policies, everything about their real estate. And we take, and there's even other categories, but we take all of that information and organize it into a binder. So once we gather, then we start to sort it and organize it into the binder. And then we critique what is in there.
Mary Beth Simon (05:47):
So that's where we go through the process of identifying gaps. So one of the common gaps that we find is simply with the way that bank accounts are registered. So if I want my husband to have access to my business bank account in an emergency, then I need to ensure that he is an authorized signer on the account. And because we open these accounts over time, it's often the case that we do not have the desired authorized signers on the accounts, as a bare minimum, to facilitate an ease of transacting when we need someone to step in for us.
Susan Boles (06:29):
Talk to me about what the scenarios are that we might need somebody to step in for us? Why do we need to be doing contingency planning?
Mary Beth Simon (06:42):
So we need to do contingency planning because we never know what's going to happen. So 2020 is a perfect example of not knowing what's going to happen next. And it's important that from a legal perspective that we have people established to step in for us, if we're incapacitated or if we pass away, right? So we have our basic legal documents, but in the day to day living, there are also situations where we may need assistance. And the goal of contingency planning is to make it as easy as possible for those who are there to support us, to do what they need to do to be of assistance to us.
Mary Beth Simon (07:33):
So when it comes down to it, I mean, some of the basics are that we need people who are close to us to have access to our passwords, if they needed. If I was hospitalized for a period of time, then I may want my husband to stop subscriptions that I have for my business, that kind of thing. These are things that we don't talk about. We don't have these conversations on a normal basis, on a regular basis. So we need to be purposeful with putting this type of a plan in place so that people who depend on us and who are willing to support us are prepared to do what needs to be done if something happens to us.
Susan Boles (08:18):
Okay. So what is different about doing contingency planning as just an individual and doing contingency planning as both an individual and a business owner?
Mary Beth Simon (08:32):
So I covered a lot of what we think about with an individual, but then when the person is also a business owner, then there are additional elements that we like to focus on here. So things that will get included in the contingency binder include entity agreements, so any of our LLCs, our escorp documents, our tax ID information, all of that stuff that we may not use on a regular basis, but are important documents to have in the plan. Information about any of our subscriptions, so for individuals, we write narratives about how they run their bank accounts and how they use their credit cards. With business owners, we also want to include the many subscriptions that they have so that there can be some information, some guidance provided to the second in command on when to stop them or what the subscriptions are for.
Mary Beth Simon (09:40):
We also include rental and investment properties since a lot of business owners have them. And so it's in addition to just the general real estate information that we have for individuals. And then for business owners, I encourage them to write standard operating procedures for the work that only they do. Now, business owners typically write the SOPs for all of their employees to make sure that they have great guidance on what's expected and how to conduct business from the perspective of the owner. But we as business owners forget to document the procedures for the work that only we do, because we assume that we'll always be there to do it. So that's a very important part that needs to be included. And then the final thing that comes to mind is sometimes there are specialized legal documents for business owners that are required in order for someone to be authorized to sell the business in the end.
Susan Boles (10:46):
Hmm. Is it worth it? Every small business owner wants to know that the money they spend on their businesses is worth it, that their investments produce results and help them grow. But if you don't know your business finances in and out, it's hard to know whether those expenses and investments are really worth it. Plenty of business owners, even the successful ones, feel like they're shooting in the dark when it comes to how they spend, save, and invest their money. Like you, they wonder if the ads they're buying, the software they're investing in, or the people they're paying are really paying off. And that's stressful.
Susan Boles (11:31):
Feeling unsure about how you're spending or investing your money might be common, but it sure isn't fun. I want something different for you. I want you to feel confident that every decision you make is guided by your financial intel. I want you to be able to decide what actions to take to grow your business from a place of confidence and purpose, not panic, so that you can feel masterful at managing your money instead of inept, or just plain scared. I want you to know exactly what's working, so you can go all in and make your money make more money. This is what I do for business owners when I step in as their chief financial officer on demand. I help them parse the numbers, look for opportunities and invest where it counts. We get clear on where they're getting in their own way and where the math just doesn't add up.
Susan Boles (12:22):
And now I want to teach you to do the same for your own business, because trust me, you can. Join me for Think Like A CFO. It's a four month accelerator online workshop and small group coaching program where I'll work alongside you, so you can start thinking like a CFO and know that every penny you spend on your business is worth it. You'll dig into your relationship to money, put your financial data at your fingertips, and build systems of cashflow, taxes, and budgeting. I'll help you integrate your financial knowledge into your operational systems and technology so that your whole business works better. And by the end, you'll feel wildly capable with your money. Think Like A CFO is starting soon. So go to scalespark.co/cfo, to get all the information and sign up. I can't wait to work with you.
Susan Boles (13:17):
So what are some things, when we are preparing to start working on our contingency plans as business owners, what are some of the kind of conceptual things that we need to think about that we need to be considering? We've got kind of standard operating procedures and hopefully those of the people who regularly listen to the show, understand the importance of having very solid procedures and processes in a business because that's one of the main ways that we build very resilient businesses. But I don't think we really think about it. Normally, when we're thinking about building those resilience businesses, we're thinking about ourselves being there to run it, like you mentioned. We're not really thinking about it as what happens if I can't be there to run it and those kinds of plans. So what are some things that you see people kind of regularly missing when they're talking about contingency planning?
Mary Beth Simon (14:18):
So, one thing that I encourage people to do is to take the perspective of this plan needs to be able to be used by someone who knows nothing about your processes or what you do. And that really gives the best context for what needs to be included, because we make a lot of assumptions on what people know about us or how easy the process may be. And it may be easy to us, but it's not easy to who do not do what we do on a regular basis. So one of the things that is important for business owners to do when it comes to contingency planning, is to carve out that time and treat it as sacred. So it typically takes 12 hours to create a contingency plan. And I like to do it in a 30 day timeframe because when you're dealing with paperwork and process, it can get old really fast.
Mary Beth Simon (15:20):
So I try to work it like a project, that we are tackling in a 30 day process. So business owners always have something more important coming up. It's easy to be tackling the urgent over the important on a regular basis. So number one is to really carve out that time. So I recommend three hours a week and treat it as sacred. If it gets taken up by another urgent issue, then reschedule it right away, get it back on the calendar to stick to the schedule. And then the second thing is when creating a contingency plan for a business owner and for their personal life, they may want to consider that there may be two different second in commands, two different people they want to appoint as second in command. One for their business and one for their personal life. And it may come down to things like, if I work with an accountant or a bookkeeper who works with me closely, then that person may make good sense to be the second in command for my business versus someone else in my personal life. So keep an open mind when it comes to that.
Mary Beth Simon (16:40):
And then the third thing I would say is that business owners really need to spend some time identifying who are the potential candidates to be their second in command and really to critique those individuals based on how they have to be trusted a hundred percent because they're going to have access to such sensitive and personal information. So they have to meet that trust requirement. And then the second thing is that they need to accept our mortality. So if this person is going to fall apart when they find out that something has happened to me, then they may not have the temperament to be a second in command because conceivably something's going wrong and they are needed to step in and really take care of some business work, some paperwork, some work on the computer, and they need to be able to focus through that. And they need to be talented at doing difficult things, because even with a plan in place, it still is a challenging situation.
Mary Beth Simon (17:55):
And then finally they need to be adept at handling paperwork because that's not for everybody, but following process and forms, paperwork, interactions with corporations, that kind of thing, is very important.
Susan Boles (18:12):
So talk to me a little bit about kind of the real world impact here. What kinds of impact have you seen on businesses who have gone through this process, created contingency plans, and maybe needed to enact them, maybe didn't. What do you see as the real-world impact here?
Mary Beth Simon (18:29):
Yeah. I love this question because I love working with business owners and seeing the transformation. So one of the clients that I worked with early on when we were just starting the process of assessing the bank accounts, he realized that one of his former employees from three years ago was still listed as an authorized signer on his bank account. So that was a pretty big aha. And who knows what would have happened if something happened to that person, anything could have gone wrong in that scenario, but that was really, he was very relieved to identify that because we just keep moving forward without looking back to see what decisions we made previously.
Mary Beth Simon (19:16):
And then another business owner who had a pretty large business, we spent a little over 30 days working through creating his contingency plan. And in the process, we were getting all of his legal documents in order, and it spurred him to think more deeply about setting up his family, his adult children, to be able to take more control of the business so that he could start stepping back. And he's now in semi-retirement. So it was in total a one-year process. We started with the contingency plan and then he moved on with other legal agreements that needed to be completed, but he is finally backing out of the business and letting his adult kids take more responsibility in the business.
Mary Beth Simon (20:13):
And then finally, I had another client who in the process of creating the contingency plan, realized that she did not have the legal, it was a professional will that she needed to have in place, it's a legal document in order to transition her patients to another therapist in the event that she was incapacitated or passed away. And it was just one of those things that was in the back of her mind, but was not in place yet.
Susan Boles (20:49):
Yeah. And I think we all have those pieces that we know we probably should take care of, we need to take care of, and they end up getting kind of deprioritized because they aren't important until they're very, very important.
Mary Beth Simon (21:08):
Yes.
Susan Boles (21:09):
And you know, you can't exist without them, once you hit this point. But at that point, it's too late.
Mary Beth Simon (21:16):
Right. And that's definitely something that came up for a lot of people during COVID. In some States the attorney's offices closed, like in Pennsylvania and people couldn't access their attorney. But during COVID, if people didn't have their legal documents in place, that's when they started thinking about it and realizing they didn't have a relationship with an attorney. And there was a long waiting line when they offices finally opened up again.
Susan Boles (21:47):
Yeah. Super interesting. So is there anything you think we should talk about that we haven't touched on yet when it comes to contingency planning or just thinking about this kind of stuff, big picture, managing change, being prepared for change?
Mary Beth Simon (22:03):
So one thing I would suggest, particularly for business owners to think about, is who has access to your passwords? And if you use a digital password manager, have you identified that person who is your backup and is that digital password manager, does that work well enough if you pay for it on a monthly or annual basis, is that a strong enough contingency plan for your passwords? Because everything comes down to digital access these days. And it's estimated that individuals have at least 130 passwords. So I recommend that they be written down and the second in command have access to them. But I would just ask everyone to think, what is your process for making sure that your appointee has access to your passwords?
Susan Boles (23:00):
I think that is a solid point to wrap it up on. So where can our listeners find you if they want to connect or learn more about what you do or more about contingency planning?
Mary Beth Simon (23:12):
So I've created a free contingency plan starter kit for your listeners. So if they would like to text the word kit, so it's just K-I-T to the number 33777. They'll receive a link to information that will get them started.
Susan Boles (23:32):
Awesome. Well, thank you so much for being here today and for sharing with us and getting us all to think more about how we should be preparing for the unexpected.
Mary Beth Simon (23:45):
Thank you so much, Susan. I loved being on Break The Ceiling, love your show.
Susan Boles (23:50):
Planning for the worst case scenario sucks. Emotionally, it's pretty hard to envision a world where we're not here anymore, or even just where we're not running our businesses. But the cool part about creating a plan around your worst case scenario is that you get to decide how to handle those crises before they even happen, when you're cool, calm, collected. And this is true of any plan we make in our business. If we can ask ourselves, what's the worst thing that could happen and then come up with a plan for each one of those worst case scenarios, ultimately, we build a very strong business foundation and an extremely resilient business.
Susan Boles (24:31):
Next week, Lauren Caselli is coming back on the show to talk about how to manage a big business change. Lauren was on the show at the beginning of March to talk about cashflow in a crisis and how her event planning business was handling the lockdown. And I'm going to follow up with Lauren to see how she's managed change this year and what her business looks like now. So make sure you hit subscribe on your favorite podcast player so you don't miss it.
Susan Boles (24:56):
Break The Ceiling is produced by Yellow House Media. Our executive producer is Sean McMullin, production coordinator is Lou Blazer. This episode was edited by Marty Seefeldt, with production assistance by Kristin Runvik.
