The Profit Builder Unscripted

Protect What You’ve Built, Contractors

• Vicki Suiter • Episode 47

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What would happen to your business — and your family — if something happened to you tomorrow?

This week on The Profit Builder Unscripted, I share a deeply personal story that shook me to my core and brought this question front and center.

A longtime client and friend passed away unexpectedly. The ripple effects? His partner and wife are now navigating decisions they never anticipated.

Out of that heartbreak came a powerful reminder of what too many business owners overlook: how to truly protect what we've worked so hard to build.

In this episode, I share:

  • The two essential tools every business owner should have in place
  • A simple first step you can take today to protect your business and your loved ones

I’m not sharing this to scare you — but to prepare you. Don’t wait for a crisis to ask the hard questions. Let’s talk about what responsible leadership really looks like.

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If you're a business owner,
You absolutely want to listen to this episode because I'm going to share with you a couple of critical things that you want to consider having in place in your business to safeguard your family's future. Hi, I'm Vicki Suiter. Welcome back to the Profit Builder Unscripted.

Here's my question for you. Do you know what would happen to your family and what would happen in your business if you were to pass away suddenly? This is a super important question for you to consider and especially an important question to consider if you're the primary breadwinner in your family. I had a very sad and unfortunate event happen three weeks ago where a dear friend and a very long time client passed away suddenly.

And he was a primary breadwinner for his family. And his wife is now working with her husband's partner on figuring out what does the financial future look like for her in terms of the value of the business and how much she gets and just how the business is figuring out and the partner's figuring out how do they fill this gap with this partner being gone.

And it's really, you know, and I'm recording this not to share this sad story with you because I will tell you my heart is broken at this loss. It's, it's, he was a good man, an amazing man, and, had such great contribution to his community and his family and his friends. But also there's this thing that got revealed about there was no key man life insurance in place for him.

And the operating agreement with he and his partner is not super clear and super specific. And they're faced with having to navigate and figure it out. Now, what I know about his partner is it's all going to turn out and it's going to be fine. But it's like for you, you know, have you considered what would happen in the event of your passing? And if you left your business in your family in a situation where they will be taken care of, where your business can go on or that your family, you know, your wife or husband can, you know, know that they will have a nest egg to be able to support them as they move forward. So a few suggestions for you along these lines. And these are two things that you want to really make sure that you have in place that will help safeguard you and your family and your business partner and your business from the struggle of not being prepared. So one of the things, there's something called key man life insurance. So key man life insurance is intended for when you pass away, the company is listed as a beneficiary. And the idea of this money is that it helps the business start to recover from the loss that it will experience with you leaving. 

And sometimes it's super valuable to have this on key employees that maybe aren't even partners in the business, but are very key to the operations of your business, whether it's a senior project manager or a director of operations or a salesperson or a controller or CFO, depending on the size of your business and the financial impact, that life insurance can go towards paying for the replacement of that person, paying for interruption of business operations and income flow to be able to offset and augment that. I had a conversation earlier this week with another client that their key man life insurance actually assures that his wife will get a certain amount of that as the buyout for the business and that the rest of the key man life insurance will go towards the employees to either that will be their buy-in or they will finish operations and hire somebody to help complete operations of the business if the owner passes. So there's different ways that key man life insurance can look and I highly encourage you to go talk to your insurance agent and make sure that you have that in place to safeguard you. 

One of the other things I would highly recommend is that you have, especially if you have a partner, but even this client who I just shared about that has key man life that will accommodate for his wife. He's putting an operating agreement in place that specifically says what he wants done with the business in the event of his passing. Unexpected, obviously, passing. having an operating agreement isn't about like people think, I have corporate papers, I became incorporated, it's all good. Well, it's not. An operating agreement is something completely different that has to do with the operations of your business and has always a clause in there that has to do with, in the event of death, divorce, disengagement, if you get fired from the, you know, one of the partners gets fired from the corporation, right? Like how do you settle up the financial element of it? So having an operating agreement is just a super useful thing to do to safeguard your business against any of those events.

But certainly, like in the case of my client and longtime friend, in the event of your unexpected passing, and it's just a super responsible thing for us to do as business owners and leaders is to make sure that we, you know, we've invested all this time and energy in building a business that we care about and that we, and we want to see continue to succeed. And in this case, you know, with a spouse, a spouse that's left figuring out and working through. And again, I'm sure it'll all work out, but there's a lot more steps that are gonna be involved now in working through those details. And it's just a good idea for us to have that clarity around what do we wanna have happen and asking that question. it's interesting because I've had this come up with a client earlier this year who was undergoing major surgery.

And he created, know, he's the sole owner, but he created an operating agreement about what did he want to have happen in the event that he didn't come out of that surgery? You know, even just something as simple as that. So, you know, it's kind of like, you might think it's a bit of a morbid topic that I'm talking about, and it's really not, you know, it's about us being responsible leaders, being responsible owners and responsible spouses and parents and, you know, doing those things that are the right things to do for our business, but we don't necessarily think to do, right? Like this client today said, I've never thought about it. My insurance broker all of a sudden brought it up and he asked what I thought about it. And I said, I think it's a great idea. And I shared this story with him of this recent event. just something to be thinking about, maybe reach out to your insurance broker and have that conversation; reach out to an attorney and find out there's different attorneys that do that and it's different per state. So if you're in the state of California, you want a recommendation, send me an email. happy. I have a state, an attorney I know in California who does operating agreements. But, you know, find an attorney who can help you draft that up. It doesn't have to be complicated and it doesn't have to be expensive. It's just a really good idea to do it. All right. I hope you found this to be valuable.

As always, I appreciate you being part of this community and I look forward to seeing you next time on the Profit Builder Unscripted.


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Vicki Suiter

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