By: John P. Napolitano, CFP®, CPA, PFS, MST

Small closely held businesses in America still employ more people than their larger, publicly owned counterparts. In many of these businesses, the employees have similar questions and concerns about the structure of that business.

Employees of small businesses frequently wonder what would happen to their jobs if the business was sold or the majority owner suddenly can’t come to work. Naturally, owners of these businesses are not eager to talk about their business plans with every employee. But the key employees have a right to not only think these thoughts, but to approach ownership and ask the questions that are on their mind.

Ownership should not sit around and wait for an employee to raise the topic with you. It has already been raised as water cooler conversation and discussions amongst and between those employees who feel they are key to the success of the business.

A good strategy for ownership is to begin to frame a conversation on the topic that we know is on the minds of your key employees. This recommendation isn’t suggested to cater to any nervous or insecure employees, it is to be sure that your business does not crumble in the event of an undesirable event such as the passing or total disability of the leader.

As the owner, you have a fiduciary obligation to several constituents. You have an obligation to your family, your clients or customers, your vendors and your employees. Any one of these could be instrumental in the succession of that business or the instant failure.

Family could step in and upset the apple cart. This could be from personality clashes or a lack of knowledge of the operations of the business. Without clients or customers, there wouldn’t be much of a business and without dedicated employees these customers would surely look for another alternative to meet their needs. If your vendors or bankers decide to pull the plug because they lack the confidence in the businesses ability to succeed, once again the entity is doomed.

As an owner, it is in your best interests to be sure that there is a plan to carry on and that all the people who make your business what it is are aware that there is a plan in place. I’d start the conversation with your key employees and vendors. Be sure that they are a part of the plan and that there isn’t any panic in the event that the unthinkable occurs.

For key employees, it is appropriate to talk about roles and responsibilities in the absence of the leader. Ultimately, this conversation should lead to a “what’s in it for me” so that these key employees don’t scatter instantly or get gobbled up by your most fierce competitor.

This may lead to employment contracts, where you can contractually limit their ability to impose harm on the fledgling business for these key employees. This may include ownership or a slice of the pie in the event of a sale.

This article was published in Gatehouse Media Publications​ on April 7, 2017.

John P. Napolitano CFP®, CPA is CEO of U. S. Wealth Management in Braintree, MA.  Visit JohnPNapolitano on LinkedIn. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.