Maybe you started with an idea at your kitchen table. Maybe you took over a family business and made it your own. Maybe you spent years building a client list, hiring employees, developing a reputation, and finally getting to the point where the business doesn’t feel quite so fragile anymore.
But here’s a question many women business owners don’t spend much time thinking about:
What would happen to your business if you couldn’t show up tomorrow?
Not because you decided to retire. Not because you sold the company. But because an illness, accident, or unexpected death suddenly took you out of the driver’s seat.
October is National Women’s Small Business Month, a time to celebrate women who have built businesses of their own. The U.S. Small Business Administration also offers resources specifically for women entrepreneurs, including training, counseling, access to capital, and Women’s Business Centers. It’s also a good time to ask a question that doesn’t always get as much attention:
Have you protected the business you’ve worked so hard to build if something happens to you?
For Texas women business owners, that means your estate plan and your business continuity plan should be working together.
If You Were Gone for 90 Days, What Would Stop Working First?
Think about your business right now.
Who can access the bank accounts? Who can make payroll? Who has the passwords? Who can sign a contract, deal with a vendor, approve an expense, or make a decision when something doesn’t go according to plan?
For many small businesses, the answer to most of those questions is the same person: the owner.
That’s what makes business continuity planning so important.
A continuity plan isn’t just about what happens to the company someday. It’s about what happens next Tuesday if you’re suddenly unable to run it.
For a woman-owned business, especially one built around the owner’s relationships, expertise, or day-to-day involvement, even a temporary absence can create real problems. Employees may not know who has authority to make decisions. Bills may still need to be paid. Clients may need answers. Contracts don’t stop because the owner is in the hospital.
A good plan asks a practical question: Who can legally and practically keep things moving if you can’t?
Your Will Doesn’t Run Your Business While You’re Alive
This is one of the biggest gaps I see when people think about estate planning.
A will deals with what happens after you die. It doesn’t give someone authority to step in and handle your affairs while you’re alive but incapacitated.
That’s where incapacity planning becomes especially important for a business owner.
Under Texas law, a properly drafted durable power of attorney can remain effective despite the principal’s later disability or incapacity. Texas law also allows authority over certain business operating transactions, subject to the governing documents and agreements of the business.
But simply having a power of attorney in a binder somewhere doesn’t necessarily mean you’ve solved the business problem.
Your attorney needs to understand what you own, how your business is structured, what authority someone would need, and what your company’s governing documents allow.
Your business owner incapacity plan may also need to coordinate with your operating agreement, banking arrangements, internal company procedures, and other legal documents.
The goal is to avoid discovering during a crisis that the person you expected to step in doesn’t actually have the authority to do what needs to be done.
What Happens to Your Business If You Die?
Now we get to a different question.
Who owns the business after you?
The answer isn’t always as simple as “my husband” or “my kids.”
Your business ownership interest may be part of your estate, but what happens to that interest can depend on how the business is structured and what its governing documents say.
For example, Texas law treats an LLC membership interest as personal property. But owning or receiving an economic interest in an LLC isn’t necessarily the same thing as having the right to participate in management. The company agreement and Texas law can affect what rights transfer and how someone becomes a member.
That’s one reason estate planning for business owners shouldn’t happen in isolation from the business itself.
Your estate plan might include a revocable living trust, a will, powers of attorney, and other documents. Your business may have an operating agreement, partnership agreement, buy-sell agreement, or other governing documents.
Those pieces need to talk to each other.
Inheriting Your Business and Running Your Business Are Two Different Things
This is where I encourage business owners to think beyond simply asking, “Who gets my business?”
Suppose your daughter is the person you want to benefit from everything you’ve built.
Does she want to run the business?
Does she know how?
Would your employees accept her as the person making decisions? Does she have the legal authority to do so? Would it make more sense for someone else to operate or wind down the business while your daughter receives its financial value?
The person you want to own your business and the person you want to run your business don’t necessarily have to be the same person.
That’s an important distinction, particularly in a small business where so much institutional knowledge may live inside the owner’s head.
Who Has the Keys?
And I mean that both literally and figuratively.
Good business continuity planning isn’t limited to legal documents.
If something happened to you tonight, would the right person know:
- where your important business records are?
- how to access critical accounts and systems?
- which bills absolutely cannot wait?
- how payroll is handled?
- who your accountant, attorney, insurance agent, banker, and other key advisors are?
- which clients or vendors need immediate communication?
- what obligations are coming up in the next 30, 60, or 90 days?
You don’t necessarily want to hand every password and every bit of confidential information to someone today. But you do need a secure plan for how the right people can get the information they need when they need it.
A beautifully drafted estate plan can’t tell your employee that your biggest client’s annual contract is sitting unsigned in your inbox.
The legal plan and the practical plan need to work together.
Business Continuity Isn’t the Same as Business Succession
These terms are often used interchangeably, but they’re not quite the same thing.
Business succession generally focuses on the longer-term transition of a business from one owner or leader to another. Maybe you plan to retire in ten years, sell the company, or eventually turn it over to your children.
A business continuity plan asks a more immediate question:
What happens if something happens to you before any of that is supposed to happen?
You may already have a great retirement or succession plan. But an unexpected illness or accident doesn’t check your calendar first.
Continuity planning helps prepare for that gap. We’ve written more about what goes into a Texas business continuity plan and how to identify gaps that could leave your business vulnerable during an emergency.
Your Business Is Part of Your Legacy
Women-owned businesses come in every size and shape. You might own a boutique on Main Street, a professional practice, a ranching operation, a consulting company, an online business, a salon, a real estate company, or an LLC that holds family property.
Whatever you’ve built, your business represents more than what’s sitting in its bank account.
It may provide your family’s income. It may employ people in your community. It may carry your name. And it probably represents years of work that nobody else fully sees.
That’s why estate planning for women business owners isn’t simply about deciding who receives your ownership interest when you die.
It’s about protecting the business while you’re here, planning for the possibility that you may temporarily or permanently be unable to run it, and making sure the legal documents surrounding the business support what you actually want to happen.
That’s Legacy Planning.
Could Your Business Keep Going Without You?
This National Women’s Small Business Month, take a few minutes to look at your business from a different perspective.
If you couldn’t work for the next 90 days, who could step in?
If you died unexpectedly, who would own the business? Who would run it? Would your estate planning documents and business agreements give those people the authority they need?
And perhaps the most revealing question of all:
Would everyone involved know what you intended, or would they have to figure it out during a crisis?
If you’re a Texas business owner and aren’t sure how your business fits into your estate plan, we can help you look at the pieces together. Schedule a complimentary 15-minute introductory call to talk about your estate plan, your business, and the Legacy Planning that can help protect both.
This material was created by Packsaddle Law PLLC for educational and informational purposes only. It is not intended as tax, legal, or investment advice. For legal advice tailored to your specific situation, please consult a qualified attorney.