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What happens if a company leader dies or is disabled?

Planning for the worst case scenario can feel morbid and wrong, but is particularly important for companies that rely on their leadership.





The worst case scenario

As a small company, we had never before really considered what would happen if any of us were to become disabled or die. In 2008, I came down with an extreme case of labyrinthitis overnight and couldn’t walk by myself for months, and couldn’t drive for nearly two years. The blessing was that the only task I could really do was sit and look at a computer screen without moving my eyes more than a few centimeters at a time, so I was able to work. Then, at the end of 2009, our founder and CEO had a series of eight myochardial infarctions and came extremely close to dying.

While everyone has recovered nicely, it has forced us to consider what would happen if either of us as the primary leaders were injured or gone. We have spent years cross-training each other and keep one another extremely close into the loop on everything we do separately, and we have a contingency plan in place for if either of us is unable to work.

But we’re a small startup, we can pivot, and we can flex, but when companies are more than a handful of people, that cross training and contingency plan of flexibility is not realistic. I recently met Angie Smucker, the founder of independent firm, CTI Insurance, and this topic came up, and the idea of that contingency plan in place for a larger company or more traditional model was mind boggling to me, so Angie spent some time illustrating below how “Business Succession Planning” (aka that contingency plan) works in those cases.

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For a free download that goes into more detail about Business Succession Planning, and gives more real life examples, click here.

Smucker tells AGBeat, “When a company is investigating vendors, preparing to do a significant amount of business with the right vendor, there’s usually a set of criteria for that final selection. For some companies, an important factor is the contingency plan that should be in place to ensure a business’ continuing ability to fulfill its contractual obligations when and if the business owner or a highly valued employee becomes disabled or dies. This contingency plan is called a ‘Business Succession Plan.'”

Additionally, Smucker notes that “Proper planning involves a written agreement but it also involves funding of the plan. Without a written agreement, the plan is nonexistent. Without funding the written agreement, the plan is ineffective. A properly written and funded plan works:

  • To encourage the person to remain with the company until his retirement.
  • To fund the necessary costs to replace that person in case he leaves or dies unexpectedly.
  • To provide for his family to demonstrate that he is an important part of the team
  • To add to his retirement fund in a way that rewards him now and into the future.”

Smucker says that working with an experienced financial advisor can often translate into getting free legal assistance with writing the business succession plan. Insurance companies have templates available, through a financial advisor, when they know the client/prospect is likely going to want a life insurance policy to fund the plan. So, the financial advisor and the insurance company provide a plan template and life insurance on the employee.

A real world example

“As an example,” Smucker says, “here is a recommendation for a $1,500,000 whole life insurance policy:

If employee stays with the company to retirement:

  • His retirement will include the $500,000 cash value accumulation in the life insurance policy. This is referred to as his “golden parachute”.
  • The company will receive $250,000 cash value to fund finding a replacement and paying James a consultant fee for 2 years to train the replacement.

If employee is killed accidentally before retirement:

  • His family receives a $1,000,000 death benefit. This shows the employee and his family that the company owners care about them. This is referred to as “golden handcuffs”.
  • The company receives a $500,000 death benefit to fund finding a replacement and to replace lost income from clients who may leave because James is no longer representing the company.”

“The insurance company offers a life insurance policy with a monthly premium at $300,” Smucker said. “Following Internal Revenue Service rules for corporate owned life insurance, the payroll service must show $50 of additional monthly income for employee but the company also gives him a raise which equals almost exactly his additional taxes. Finally, he can let his family know that they will not be relocating. His stress level is reduced and he becomes even more effective as the face of the company. And, employee’s’ wife is convinced that her husband and her family are exactly where they need to be.”

This basic overview can be adapted to situations of disability, and Smucker advises companies of all size to work with their financial advisor and insurance company to come up with legitimate contingency plans, because we’re all human and anything can happen.

Lani is the Chief Operating Officer at The American Genius - she has co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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  1. DonReedy

    July 31, 2012 at 2:50 pm

    Angie Smucker hits the nail on this one.  As I’ve moved in an out of brokerages it’s clear that leadership in this area is wanting, and her real life example should be front page (easy) reading for everyone who has a team that depends on them.  

    • Jeff Brown

      August 2, 2012 at 12:26 pm

       @DonReedy A real leader ‘creates’ his own replacement. 🙂

  2. Pingback: Testamentor: automatically send messages, files to people when you die - AGBeat

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Business News

Fake news? Well, what about fake reviews?

(BUSINESS NEWS) Amazon is swamped with fake reviews, making it harder than ever to trust whether or not a product is legit. How can you spot them and avoid falling victim to this shady practice?



Person shopping online with credit card, but are they reading fake reviews?

These days, most of us have turned to online shopping in lieu of brick-and-mortar establishments to get our favorite items shipped directly to our front door. With many retailers still closed, and many more of us understandably wary of exposing ourselves to the risk of COVID-19, it’s easier to just click “buy” and then spend the next two days with our noses pressed to our windows in anticipation of the arrival of our new toy or garment. But are we at risk of being tricked by fake reviews?

If you’re like most people, you probably depend on product reviews to make a purchasing decision. Honestly, it’s perfectly reasonable to see what others thought of the item before you buy it. These online reviews are almost like your neighbor, who whipped out his lawnmower and bragged how it goes from 0 to 4 mph in less than thirty seconds. Obviously — obviously — you had to run out to your nearest garden center to pick up one of your own after his glowing review of it, right?

That’s kinda like online reviews, too. You can’t just knock on the purchaser’s door and ask them what they thought of it, which is why you carefully peruse those reviews and weigh those pros and cons. Okay, this shirt fits loose. Fine, these kitchen shears broke after three uses. Whoa, this brand of potato chips puts hair on your chest…? Sweet! And you also probably looked at those 3-star reviews, too, to see what was merely “meh” about the product. With this assortment of mixed reviews, you can be confident that you’re making a rock-solid choice.

Uh, sadly, nope.

Unfortunately, Amazon (as well as other major retailers, such as Walmart) are often fraught with a glut of fake reviews. In fact, there are numerous Facebook pages dedicated to the purchase of these reviews, and many of the reviewers are compensated with a monetary reward (usually the cost of the item, plus a few extra dollars for their work) for posting the glowing 5-star rave.

So what can you do to help protect yourself for falling for these seemingly harmless lies?

Well, first and foremost — a fake review isn’t necessarily harmless. If a defective or dangerous product is boosted by a false review, it can seriously harm you. Sure, there’s a good chance the fake reviews are benign, and the worst you’ll be in for it is losing a few bucks on a crap item. But if something is using counterfeit or unsafe ingredients (such as minoxidil in potato chips because, real talk, chips aren’t supposed to put hair on your chest), then yes, you need to be informed of it so you can make an educated decision about whether or not that item is coming home with you.

So, the question remains: How can you, intrepid shopper extraordinaire, avoid purchasing a lemon? (Unless, of course, your goal was to buy an actual lemon in the first place. Margaritas, anyone?) The good news is that there are a couple things you can do. For starters, common sense goes a long way. Do the reviews offer any context, or is it just line after line of, “Loved it!” without any actual feedback on the item? That’s why those 3-star reviews are so priceless. Usually the reviewer actually used the item and had a valid reason for their tepid review, allowing you to make an educated decision about it.

Finally, there are a couple of websites you can use to help you out. First, there’s Fakespot. This web extension will cull out all the fake reviews, allowing you to see at-a-glance the remaining genuine reviews. It then reviews the item for its credibility, letting you know if the seller was trying to pull a fast one on you. Then there’s ReviewMeta. Unlike Fakespot, this website goes through the views and instead of grading the seller, it actually grades the item based on the average score of the remaining real reviews. And by using both of these websites together to check those reviews? You’ve now got yourself a pretty decent idea if the product is actually worth your hard-earned dollars.

It’s far too easy to get scammed these days. However, by staying alert and remaining mindful about your online purchases (and avoiding the temptation to give into those stress-motivated impulse buys), you can avoid being bilked, too. And hey, instead of looking at online reviews, maybe you should go back to the old-fashioned way of doing it: By asking your neighbor for their opinions of items. Just, y’know, do it from at least six feet away, while wearing a face mask.

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Business News

Manufacturing is bouncing back, but supply of materials is struggling

(BUSINESS NEWS) As manufacturing demands surge, so do material costs. The pandemic has shifted where we’re putting our money, but supply is struggling to keep up.



Manufacturing worker sealing a large pipe together.

As the United States’ manufacturing process comes back up to speed, a surge in demand is creating a shortage of the one thing manufacturers need in order to do their jobs: Supply.

Fox Business reports that, due to a much quicker return to normalcy for manufacturing than some expected, a price hike for materials is affecting everyone from the bottom up: “Prices for steel, aluminum, lumber and other materials are rising in response to higher order volumes. Commodity supply chains are now clogged with orders, causing some producers to add weekend hours and overtime for employees.”

The fast manufacturing rebound seems to be a harbinger of better days ahead, but this supply bottleneck could dampen producers’ resolve.

It should be noted that the spike in demand for goods which use the materials in question isn’t an entire surprise. As Fox notes, much less of consumer money has been going toward travel and dining out. This has resulted in more money flowing into things like appliances, vehicles, and entertainment commodities.

But the toll is hitting producers coming and going as things like depressed oil and the paper used in packaging undergo substantial price hikes, leading some companies to stockpile resources in hopes of having an edge in the future.

Others find themselves in the uncomfortable position of having to choose between lower profit margins or higher prices on manufactured productsa choice that is sure to impact consumers, if not the rate of consumption.

Indeed, some companies, such as Northwest Hardwoods, have an upper limit on the price they can charge on a finished product regardless of rising material costs.

It’s not all bad, of course. Global prices for materials like aluminum and scrap steel have gone up, which means people like Brad Serlinthe president of United Scrap Metalcan make a killing. “We can sell everything we have,” says Serlin, referencing “big orders” from recently busy steel mills.

As the pandemic wears on, though, one thing is crystal clear: The high demand for domestic goods coupled with rising global prices for materials is going to make for some severe price hikes in the coming months.

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Business News

Jeff Bezos steps down as Amazon CEO, moves into space travel

(BUSINESS NEWS) Jeff Bezos is stepping down as Amazon’s CEO in order to focus on other passions, such as his space company, Blue Origin.



Jeff Bezos standing in front of very large Blue Moon spacecraft.

Amazon founder Jeff Bezos will no longer be Amazon’s CEO starting in the third quarter of 2021. On Tuesday, Bezos announced he is resigning and will hand the job over to Andy Jassy, Amazon Web Services’ CEO. Bezos will transition to the role of Executive Chair on Amazon’s board.

“I’m excited about this transition. Millions of customers depend on us for our services, and more than a million employees depend on us for their livelihoods. Being the CEO of Amazon is a deep responsibility, and it’s consuming,” said Bezos to employees in an email. “When you have a responsibility like that, it’s hard to put attention on anything else,” he said.

By stepping down, Bezos says he will have more “time and energy” to focus on “other passions” like Blue Origin, his space company. In 2000, the billionaire started the rocket company to make space travel affordable and easily accessible by using reusable launch vehicles.

Since the company was founded, it has yet to reach orbit and is lagging behind Elon Musk’s Space Exploration Technologies Corporation (SpaceX). SpaceX, which began two-years after Blue Origin, has already achieved some huge milestones.

In September 2008, Falcon 1 became the first privately developed liquid-fuel rocket to reach Earth orbit. In May 2020, SpaceX launched two NASA astronauts to space.

Blue Origin has a lot of catching up to do, but, with more free time, Bezos might make sure the company moves full-speed ahead.

I mean, look at what he did with Amazon. In 1994, Bezos founded the multinational technology company. Since then, the e-commerce giant has grown into a trillion-dollar company. It has more than 1 million employees and millions of customers.

“This journey began some 27 years ago. Amazon was only an idea, and it had no name,” Bezos said. “Today, we employ 1.3 million talented, dedicated people, serve hundreds of millions of customers and businesses, and are widely recognized as one of the most successful companies in the world.”

There is no word about how much more involved Bezos will be with Blue Origin, but the company already has things to look forward to.

Last December, NASA selected Blue Origin’s New Glenn rocket to “launch planetary, Earth observation, exploration, and scientific satellites for the agency.” This contract will allow the company to “compete for missions through Launch Service Task Orders issued by NASA.”

Last month, it conducted a successful flight test of its New Shepard capsule, and many more tests are, without a doubt, in the company’s future.

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