IT’S ABOUT THE DYNAMICS
A survey indicated that most business owners understand their core business very well and 95% had ideas on how to improve and grow. Where they struggle is converting their ideas into actions. Failure to plan is attributed to lack of time, skills or experience, or a combination of these.
Many new companies are started by two people, whether husband & wife, or partners, perhaps one bringing the ideas and one contributing the financial support. More often than not they end up as 50:50 equal owners of the shares and each of them is a director. All this is absolutely fine while they agree on the business direction and developments; but if they disagree?
Company owners and directors fall out for all sorts of reasons – personality clashes, different life aspirations, different levels of commitment to the business, outside family pressures; there are as many reasons for falling out as there are for being in business together in the first place.
And what happens if they do fall out? The atmosphere sours, the staff leave for new jobs,
service delivery levels drop, customers go elsewhere and eventually the business fails and the company folds.
The appointment of a non-executive director who can act as counsellor and mentor can help to prevent this happening; more so if the non-executive director holds one share in the company so s/he can vote as a shareholder for the benefit of the company (for example, to dismiss from the board the troublesome and uncooperative director).
What if a sole owner and director dies? A will can appoint Special Executors to manage the business and maintain its continuity and value for the benefit of the surviving family.
Special Executors need to be experienced in business, unlike the general executors who need to be able to administer the general estate. Speak to your solicitors or will writers about Special Executors.
Sign up to NED Solutions Newsletter...