Owning a business can come with some harsh realities, but preparing for the worst can help ensure a strong future for the business no matter the circumstances. Issues arising in the workplace are vast, ranging from the death of an owner to workplace safety to cyber attacks and natural disasters. This article will discuss these issues and explain how to prepare for the worst.

Death of a business owner

Addressing the topic of death can be delicate for most people, but it’s something everyone must face and every business should prepare for. Preparation is key, and one of the most critical aspects is succession planning. Succession planning ensures that a business can continue to operate seamlessly even after the death of an owner.

Succession plans may include creating operating agreements, buy/sell agreements, power of attorneys, or trusts. Each of these documents provides the legal structure for the transfer of ownership and decisionmaking authority. They establish clarity and avoid disputes by outlining how ownership and control will transition in the event of an owner’s death or incapacity.

Each of these documents has a common denominator. They each designate the transfer of power to an individual or group of individuals after an event occurs causing death or incapacity to the owner. The selection of a successor is not enough for a succession plan to be effective. Throughout the process, business owners and employers should prepare employees so they can pass the leadership role without a hitch. That means to effectively plan, employers should equip employees with the necessary tools—both skills and knowledge—to understand and manage the business.

Employers can prepare their employees by facilitating comprehensive training and providing shadowing opportunities. By offering consistent training to a broad group of employees, the pool for potential successors would grow, which would enhance the ability to select the best individuals for the role. The best candidate may evolve over time, so it’s important to create a flexible plan to adapt to those changes.

Death during operations

A business owner has the responsibility to ensure the workplace is a safe environment for their employees. This includes following the Occupational Safety and Health Administration’s (OSHA) standards and complying with other federal and state laws. Failing to take necessary precautions may result in serious injury or even death.

Generally speaking, OSHA regulations can include: (i) ensuring the workplace is free from serious recognized hazards and compliance with other OSHA standards, (ii) providing training, (iii) keeping records of injuries and illnesses, and (iv) providing payment for personal protective equipment when applicable. There are numerous OSHA standards that must be complied with and states may add their own requirements to the federal OSHA standards.

For example, employers should be aware of other federal and state labor standards such as requirements for conducting background checks, keeping appropriate working conditions, and hours and restriction.

Cyber attacks/ransom hacks

As businesses increasingly transition to becoming paperless, the threat of cyberattacks has increased. Cybersecurity risks are not limited to action movies where someone frantically hacks through firewalls in a dark basement to a James Bond soundtrack, nor are they limited to enormous companies or government agencies. It is a serious consideration for even the smallest business owners.

Small business owners may face higher risks of fraud because they often lack the resources to secure their accounts, files and other sensitive information. For example, while it is convenient to store credit card information or passwords on your computer to avoid typing them in for every purchase made or every login, it is strongly advised against doing so. Saving credit card information on a business computer may open the door to credit card fraud. If a business finds it more efficient to store this information, then it’s important to invest in reliable cybersecurity software.

Natural Disasters

Natural disasters pose challenges for businesses, and despite being beyond an owner’s control, an owner is still responsible for preparing for these kinds of events. One of the primary concerns is property damage.

A business owner can mitigate damages to lost documents by investing in reliable cloud storage software and/or keeping paper copies of important documents. This ensures necessary information can be accessible, even if there is computer damage. Further, one of the best ways to prepare for property damage is maintaining a comprehensive insurance policy. If property is damaged, an owner should take photos of the damage, and document all evidence to strengthen their insurance claim. Hiring an attorney can also help ensure a smooth claim process.

Maintaining a contract with customers that includes a "Force Majeure" provision is vital if you are working in an area where natural disasters can occur. That provision will protect your company in the event a natural disaster prevents your company from performing its obligations under the contract.

Overall, while owning a business can be difficult, preparing for these challenges ahead of time can minimize future issues. By addressing succession planning, workplace safety, cyber protection, and preparation for natural disasters, a business can ensure its longevity even in the worst-case scenarios.

Jared Nusbaum is an attorney with the law firm of Zlimen & McGuiness, PLLC in St. Paul, MN. His practice areas include employment law, small business law, litigation, and bankruptcy. Email him at jnusbaum@zmattorneys.com. Ellie Sammon, a law clerk at Zlimen & McGuiness, PLLC contributed to this column. Sammon is a 2L at the University of St. Thomas School of Law.