Episode 56: Contingency and Succession Planning for Small Business Owners
A Comprehensive Guide for Small Business Owners
What happens to your business if something happens to you?
Today I am speaking with Julee Yokoyama about the importance of contingency and succession planning for small business owners.
Julee gives actionable and practical steps so small business owners can start organizing and protecting themselves and their businesses for the expected and unexpected future.
Julee’s Project CYA Essentials
Connect with Julee:
Thanks for tuning in to another episode of Collab with Kiva.
See you next time!
Are you ready to take massive action in your business and harness the power of data in your decision-making? Let’s chat 👇🏽
Podcast Transcript:
Kiva Slade 0:01
Hello and Welcome to Collab with Kiva. I'm your host Kiva Slade. From the marbled halls of the US Congress to my racing themed office chair. I've learned that there is no perfect path to the life of your dreams. My journey over the past 20 years has included being a Legislative Director for a member of Congress, Policy Director for a nonprofit, stay- at-home mom, homeschooling mom, jewelry business owner, and now the owner of a service based business. Whether your journey has been a straight line, or full of zigs and zags. Join me and my guest as we share insights, hope and lessons learned from our female entrepreneurship journeys. May the collaborative sharing of our stories be the tide that lifts your boat. Let's dive in.
Kiva Slade 0:55
Hello, everyone, and welcome to another episode of Collab with Kiva. I'm your host, Kiva Slade, and today, I am excited to have Julee Yokoyama with me today, Julee and I actually have a shared thing in common. We are both Directors of Operation. But in addition to that, we're also pretty pretty cool people. But besides that, too, okay, Julee is a small business Operations Consultant. She has a certification as a Director of Ops as well as a Project Manager. Needless to say, She leads the planer, everyone who does her homework, and she helps service based entrepreneurs do the same by organizing and protecting their business operations. What are the results of that peace of mind, operational efficiency, business growth, and over all life fulfillment, with 15 years consulting experience in both corporate and small business settings, she guides and supports her clients through the tough conversations around risk management, and succession planning. So the mission critical aspects of their businesses are covered in case of emergency or extended leave. So guys, we're gonna dive into this topic today of succession planning, contingency planning, things that many of us do not want to talk about. We don't want to talk about them sometimes with our friends and families about our own lives. And we definitely don't always translate those conversations to our businesses. So I want you to grab your notebooks, and get ready for some really good stuff. Because this is stuff that's important as we not only build our businesses, but we have a plan for how those businesses will continue in the case that something happens to us. So Julee, welcome to the show. I am so excited to get ready to talk to you.
Julee Yokoyama 2:44
Great, thank you so much, Kiva. I'm excited to be here. So a little bit to narrow our focus for our conversation today, based on my bio. Yeah, I really was helping my clients with business operations strategy work. And one thing that I was finding, as we were going through looking at how prepared their operations were, I would I started asking the question, what happens to your business if something happens to you? And everybody just was a bit of a deer in the headlights? They either didn't have an answer to the question, agreed it was important, but didn't know how they could answer it. But and all in all, they were looking for answers. And so then I started asking just other entrepreneurs that I was experiencing out in the world to see how much of a gap this really was. And I continually time and time again, was not finding anybody with a clear answer or any sort of planning in place, and then started even listening to what what were people talking about in the business space, small business space. And no one was really talking about anything like contingency planning and succession planning and emergency planning or so I then got my wheels turning and based on my background, I knew that I could offer a solution. And so here we are today talking about this. And this is pretty much my my sole focus at this point, is to support people with covering their butts. And not only further themselves, but for their business, their families, their teams and their clients.
Kiva Slade 4:29
Yes, absolutely love that. And I love the fact that it's our operations focus that brings us to this point, you know, when we get to see the backend of businesses, and you start to see kind of how all the pieces come together, how things are interconnected. You know, like my focus is really on data and understanding that and how that plays in but we both have that start from, let's see what happens in the backend. And then when you start to see that you realize, Wait, even if you have all of those things in order, there are are still additional parts that need to also be in order. And one of those is that level of planning that have the what if planning. Moving forward? Okay, so tell me some more about this because we talked about contingency planning, but also succession planning. What's the difference? What do they mean for small business owners?
Julee Yokoyama 5:21
Yes. Okay. So contingency planning and succession planning are typically bigger business concepts that maybe you might be familiar with, if you've worked in an office setting for a larger company, you don't. They're not typically something that's really talked about, like I said, in the small business space. So I want to break down these two concepts, and give examples of what they are and how they can be seen in the small business setting and how they really can work together. So contingency planning is a course of action that's designed to help you respond effectively to significant future events or situations that may or may not happen? So it's Plan B, for how to respond to a planned or unplanned circumstance. So this can be looked at at the project level with any type of project you're trying to, to perform? And looking at, you know, what, you have your your, you obviously have your desired outcome. But what are alternative circumstances that could come to pass? And can you proactively plan for that. And so this is risk management, fundamentally, and so it's looking at risk assessment, and then identifying what would potentially trigger that risk. And then looking at how you could potentially respond either through a prevention plan or a mitigation or contingency plan that would minimize the impact of that risk if it were to occur. And small businesses, in my opinion, can look at this across their entire operation, because we're small enough for that. And that really helps us address, identify any blind spots that we might be missing. And in our business, and so making time for this kind of planning, it's, it really allows businesses to have more resilience, where something may only be a drop in the bucket versus a full on crisis.
Julee Yokoyama 5:23
Gotcha! And our smallness actually helps us be more nimble and be able to, you know, kind of maybe course correct if needed, and just address those things. Because like you said, we're not ginormous, having so much in which, you know, kind of land to cover as we look over those things. So that's super helpful. So guys, small is an advantage, okay.
Julee Yokoyama 7:51
And one thing I do want to add, because when you know, when people think of risk management, they often immediately go to a negative place, we are pretty conditioned in this modern time to focus on good vibes only, you know, and to focus on what we the outcomes we do want. And it's, you know, that we might be manifesting something bad if we, if we spend too much time in a pessimistic space or anything. But really, it's a healthy, it's healthy, to look at everything from all the angles to, you know, allow all the possibilities to kind of ruminate as long as we don't grip too tightly to any of them. And it also can be the good things that can happen on our business, like things going too good. Like, you know, taking a vacation, like to Europe and backpacking. And that's, that's something huge that, you know, you really have to think about all the angles of before you choose to step away from your business that way or delegate activities. Thinking about if you did have a launch, and maybe you're anticipating selling three services, but you had like 10 to 20 people respond with interest, how are you going to address that? And then lastly, just kind of going off of the recent nearly $2 billion lotto when that happened. Yeah, thinking about, you know, something that we all kind of daydream about, right? What did the lottery but you know, you think about having that winning ticket and you're not just going to like immediately see the numbers pop up on the TV and then go straight to the lottery office and cash in. You have to do you have to really think about how life changing that experience would be. And I have to say that I have researched the lottery. That is the the project manager in me I guess, and you know, you have to get a legal team. You have to get accountants, you have to get security, and you potentially have to move before Yeah, that's
Kiva Slade 9:56
right. Did you see the one guy who showed up And then like a costume because he didn't want his family to know he had one. And it wasn't even like this huge, like it was enough money. But he literally accepted it with a costume on because he did not want his family to know that he had been the winner because he was afraid they would become lazy. So he came in like a bird like a costume in order to like actually collect his winnings. So there are things you have to consider maybe that might be worth costing me where to collect your winnings.
Julee Yokoyama 10:32
In state by state, you you can't necessarily fight, he can't be anonymous. Some states require you to say who you are. And so that becomes public information. So yeah, so anyways, okay, so part two of this conversation is succession planning. And so I'm gonna identify it, and then talk about how this all pulls together. So identifying, it's identifying strategies for delegation of responsibilities and roles within the business. It's also a way for the owner to communicate the intentions for the future of the business if the roll were to change, or they were to depart the business completely. So yeah, this basically, this is what happens to the business if something happens to me. And that question, you can look at the scenarios of that as something of I win the lottery and the business is thriving. So maybe I want to hand the reins over to someone else if I'm not interested in running it anymore. Or maybe you're reaching retirement and you want to hand it off to family members, or you want to reduce the scope of your responsibilities. And so you're starting to look at delegation strategies in that way. Maybe you want to sell your business, or buy another business. And both of those cases, there's huge due diligence processes. And it's, your role will change in that transition. And so these are things where you're going to have to gather all the information together, and somehow can, you know, do some knowledge sharing, thinking about planning, planning for yourself, or a team member to take a vacation. So these are things it's not just about you. It's also thinking about your team and key team members. I know for me, my marketing assistant, she is having a baby in January. And so she handles, you know, my you know, I make my YouTube videos. And then after that, I hand them off, they go through a whole process, and then my whole online presence, she has her hands involved in that. And so proactively thinking about, well January's coming sooner than later. What do what does she do that I don't know how to do. And so let's start to get standard operating procedures in place. So this stuff is documented. So that I'm able to step in on activities if needed. And we can plan for the best case, right, we can plan that there's minimal interruption to the business, that, you know, she has the baby, it's great, she's full of energy and able to do all the things. But really, we don't know that. So we need to think about what would happen if she does need to divert her attention away consistently for a period of time. And so doing planning for what that would look like, I could proactively plan my video production, getting those videos out weeks and weeks, you know, a certain number of weeks in advance so that she can complete things before she has the baby. So there's just different ways you can kind of look at it, and succession planning, the process can really help you think of those scenarios. And then it helps guide you with how to pull information together that you would need to be able to communicate to somebody else. And then obviously we can think of emergency planning of you, a team member or a loved one has a serious illness or injury. There's a need to go caregive for somebody else where you kind of have to drop everything and depart right away or some. And you know, the elephant in the room we don't like to talk about but it affects everyone on the planet is death. And, you know, unfortunately, we don't know when that time comes. And when oftentimes I hear business owners, especially solopreneurs they'll say to me, Well, I don't really think there's anything to plan for because if you know I go away the business just kind of ends and that's nice to think about, but really your business is a machine that you built piece by piece. And it is, if it's operating to the point where you're delivering something to clients, and they're paying you a return, you have multiple pieces in place that need to be dismantled if the business were to close down. And if you're not around to do that someone else has to. Otherwise the business keeps incurring expenses and people are left hanging one way or the other, whether that's clients, or your team members, you know, or strategic partners, etc. So, having, you know, when you think about the question, what happens to my business, if something happens to me thinking about if somebody needed to come in and close the business down worst case scenario, you know, to act quickly to to address affairs? Do I have someone identified to do that? At least one to two people? Do those people know what's going on? And do they have what they need to do anything? So that kind of gets into strategies to get started with succession planning. So I recommend, you know, thinking of questions like that, and then thinking about, you know, for the contingency plan, which is really what a succession plan is, to that question. What happens to my business, if something happens to me is the risk. And then the contingency plan is, my response to this is a succession plan of here, I'm pulling together all the information I need to give to somebody so that they can take the necessary actions I have spoken to them, they understand they have accepted that responsibility if and when it's needed. And they know how to access the information, because you can plan all day, but if you don't tell anybody about it, it's as if it never happened.
Kiva Slade 16:47
That's right. And if you don't have access to actually get in and do things, you know, I think about that with something small, it feels like it's like your social media presence, you know, someone has passed away, and no one can access their Facebook account. And every single year now, Facebook's still telling us when it's their birthday, and everyone then is like, you know triggered because like oh wow, this is this, you know, such and such as husband or such and such as father or son, or, you know, wife, mother daughter fill it in. But you know, those are the things that happen, but no one knows how to get into the account. And therefore no one can actually close this down. So it's really important to put that plan into place. And like you said, even for those that are running their own business, and they consider themselves a solopreneur. You're providing services, someone's paying you for services, you probably have subscriptions to various software, and different tools and things of that sort that yeah, those all those things are bits and pieces that have to be compiled together, and which to break back down, as you said, the machine that you have built. So I love that illustration that you gave there. So let's keep going and think just a little bit more on. You know, we don't obviously, I think talk about these things within the entrepreneurial community, I think a big part of that stems from, we don't like to talk about it in our own personal life either when we have to acknowledge our own mortality. But when it comes to thinking about that, and just diving even a bit deeper into, it's not only the what ifs if something happens to me on a large scale, it can really be like you said, your team member has a baby that's coming, you know, what does that look like to put that in place, we've sort of kind of maybe possibly are somewhat near out of COVID, you know, but for some people, that was like a thing as well, like you, maybe you caught COVID, and you could not deliver on your services the way you had needed to, or something of that sort of, you know, I have a client who just shared today she's having surgery in January, and she has to be like, completely out, like away from the office, like not doing anything for at least the first week. She thinks she'll be able to do some Zoom things the second week, but again, you mentioned that's the best case scenario, you know, but that's not we really don't know how our bodies are going to respond to what our recovery is going to look like. So even for me as like, you know, leading her team, that's like, ideally, you might be out a week, but the doctor saying three weeks, so that's really more of what we need to dive into as to what does that look like for a three week period, maybe a four week period of you having very limited access and us having limited access to you? What needs to be in place now to make sure things continue to flow smoothly. In the service to clients, meetings with clients, like do those so many different things, I think that we could start to think through what needs to happen here so nothing falls apart. So I mean, I think like, we don't talk about those things, often enough, or frequently enough. And I'd love to get your perspective on, like, thinking of a time a timeline, like if you mentioned, you know, maternity leave in January, okay. When does someone start to think about those kinds of things within a team? Like, is there a timeline that they should think, hey, you know, what, maybe three months out, we need to start thinking about this, ideally, six months out? You know, obviously, we can't, back to risk management, know all the things if surgery happens, we might need to have that scheduled more frequently or sooner. But you know, is there a timeline to consider in you know, like, what kind of steps should we actually take?
Julee Yokoyama 21:02
Yes, so I would think about it as how, like, as soon as possible, really, because, you know, we can all we can gauge best case scenarios and hope for those. But if we get too caught up in the, it'll never happen to me mentality, then we are putting ourselves at great risk. And the business itself, the business is its own entity, I think especially as solopreneurs. And really, micro businesses, we can over identify ourselves, and the business is one in the same. And so as we're building these businesses, and they're producing, you know, money to take care of us and things like that, like they really kind of take on a life of their own, and they really need to be treated with respect. And, and so one of those things is really thinking about how to care for the business as much as you're caring for yourself and the team and your family. And so, as soon as you identify a risk, the sooner like, the sooner you can start planning for it, the better. But thinking about how busy is the team, you know, who would actually be pulling that information together? What is their workload look like between now and the time they expected timeline of that, of that situation, come into action, or Yeah, going into action, and start from there. Because you don't want to be rushed and waiting it till the end. And then you have your regular like tasks to do or maybe you have a deadline for projects or a launch. And you have all this fluttering of other activity, and then you have weighing on your shoulders that oh, my gosh, I have to like, get this SOP done, or I have to document all of these things or you know, write these email templates that people can send on my behalf or whatever. So the more that you can start. And I really think it's, you know, this is a project management concept, it's look at the angle, and then break it down into chunks, chunk it down. So from where you are what you have in place now, to what you want to have in place at the finish line, just document just get a scratch piece of paper or a whiteboard, you know, if you're a digital, you know, type on on there, I get pretty messy with it myself, and just write everything down that you can think of, and then go to your team members, and then have them you know, kind of spot check and be able to see what you might be missing, and then put it in order of priority. And I would really try to knock out the most crucial stuff first, so that if any circumstance change between now and then, you know the risk is minimized. So that's, that's what I would do. But again, yeah, it's, we get, we get caught in the trap of we hear stories of things happening to other people, but we don't believe it can happen to us. You know, we'll have sympathy and you know, and be like, Oh, that that sucks that happened to them. But then really, then we just, you know, our goldfish, my attention spans just kind of drift off to the next, the next thing and then we move on with our lives. And then we get surprised when something happens to us or someone you know, in our immediate environment, our immediate community. So I definitely recommend it.
Kiva Slade 24:37
Yeah, I wholeheartedly agree and I love what you shared about the business is its own entity. You know, like for many of us it's it's an LLC, it's an S-corp. It is honestly, legally speaking, its own entity that is separate and distinct from us in there. before it does have its own needs that needs to be taken care of. It has its own level of care that we should actually give it. So I love that distinction. Because that's even something like our business bank accounts. Like, if you are the only person who has that, do you need to add someone else who would have access to those in order to be able to take care of things, you know, so making sure, again, that you list out what needs to be done. But then also follow up with making sure people have the right access credentials, so to speak, that are needed to follow through on the steps that have already been listed out and understanding that, hey, business is its own thing. It has its own needs that need to be taken care of. So I so greatly appreciate that distinction between the two because we do we conflate ourselves and our businesses, especially when it's typically you almost feel like one in the same. So yeah, that is super helpful. Okay, so let's see here. I think we've like covered quite a few things and our way of going through this. So talk to us, though, about some, like, let's make this so practical and actionable for everyone. So like, what are some basic steps to get started with succession planning? If you had to hot Seat Julee say, Julee, this is my business, I need to know the next five things I need to do. What would you really say?
Julee Yokoyama 26:37
Yeah, so I would think about scenarios. So if we look at succession planning and thinking about delegation strategies, or you know, just anything where there's a knowledge sharing component that will need to happen. And if you haven't, if you don't have anything in place, as many people I talk to you don't, I would start with the question What happens to my business, if something happens to me, and then think about a couple scenarios of what could happen, that would take you away from the business for a temporary or, you know, all the way up to a permanent point of time? And then what would you need in each of those scenarios for others to be effective in stepping into your shoes, and then it's organize. Organize all that information together, pull it all together. And then so that's planned and organized, I consider those kind of like, step one. Step two, access and awareness. So you're gonna want people to take action as you won't be there. So who will be the responsible party to take action? Do they know that they are a person, do they are you clearly communicating the expectations? Which I just have to say, communication, and lack of communication is the root of a lot of business owners suffering, they, you know, we tend to have expectations in our minds of how we want things to go or how we want our team members or clients or however to do things. But if we haven't clearly communicated those expectations or how to perform things to them, then we're kind of we're setting us both up for failure. So access and awareness of making sure that everything that you've planned and organized for is accessible to those people and that they are aware that one, you want them to do anything at all, and that they know how to get the information they need to perform properly. And lastly, accountability to get this planning in place, because it is something you're going to want to kick down the road, potentially, you know, the day to day fire drills that come up are going to, you know, be shinier in your eyes. And they're going to draw your attention away. But this type of planning is super important. And so just having an external accountability source, whether that be a business bestie and maybe that's you know, your your life partner, maybe it's someone else in the business, or hiring a professional like me, to help you hold your feet to the fire to not give up on it to not forget about it. And to just get it done. And then it's a living breathing thing that you can revisit at least annually and just revise on you've already done the major legwork. And so then you just iterate over time and then you're covered.
Kiva Slade 29:51
I absolutely love that. That's so helpful. Because like he said, It is so easy to kick this down the road. It's like hey, I'm feeling good, business is good everything's, we're both healthy. You know, and just like there's no need for this right now, because like you said, there's so many other things that are just calling for our time right now. So I really love that. So speaking of though, someone wanting to work with you, because they said, Hey, Kiva, Julee, I appreciate all this, but I really just don't have the time. I don't have the bandwidth. I don't know where to start. And there is no one else to hold me accountable. So I need Julee to be that person. How do they get to begin the process of working with you?
Julee Yokoyama 30:33
Yes. So if you're inspired to get more organized and addressed the question, what happens to my business, if something happens to me, then I work with clients in two ways on this, and one, I offer a way to just take the guesswork out of how to implement a succession plan. And that is through what I call project CYA essentials. And that provides you the resources and templates and guidance, you need to complete your succession plan and, and have the resources available to effectively iterate on it over time. It's also something that you can you can delegate it to someone else, you know, like maybe you have a Director of Operations or a Business Manager of some type. But I would say that, and I help with this and essentials is like planning, because they're gonna have to pull information out of you, right? To get it documented. So don't be don't think that it's something that you can just hand off completely. But yes, you can have help. And and yeah, so we'll provide a link to that in the show notes of how to how to take a look at that. As well as I offer a one on one version where we we do the succession plan. But we also take a deep dive in your whole business operation and do risk management through contingency planning for, like the key critical risks we see across your business.
Kiva Slade 32:09
Awesome. Well, I'm excited to share that with everyone. And as Julee, share those details, and links will be in the show notes and make sure you check them out, make sure you go ahead and connect with Julee because, hey, don't kick this down the can like you know, the can does not need to go any further down the road than it is right now. In addition to that, it's really just important to as a CEO to step into your CEO, big girl or boy pants, you know, and do the things that need to be done for you as well as for your business. Because yeah, we'd love to delegate it off and let a team member totally figure it out. But almost like a Would you just kind of like hey Jr, go put together mommy's will for her or you know, dad's will, like, I don't know if that's exactly the best course of action. So really taking the steps that we need to take to make sure that we think through what our business needs, and make sure that we love what you said, communicate with those that we are, you know, choosing to say, Hey, I'm gonna ask you to take it and make sure that there's really that consent there that that's a role that they they want to play and they understand the details of that role moving forward is really going to be important. So thank you so much, Julee, for sharing and helping us all really talk about the things that are sometimes hard to talk about because again, we have to acknowledge our own mortality, but necessary things for us to consider as business owners as we continue to grow these empires, but also deal with the fact that we are mortal human beings. So once again, everyone makes sure to check out the show notes for information on how to connect with Julee, to get yourself started on your project CYA, because we all need that in our lives and in our businesses. So make sure to tune in next time for another episode of Collab with Kiva. And thank you again, Julee, for being here.
Kiva Slade 34:16
Thanks for tuning in to this episode of Collab with Kiva, each of us has a different path. And I hope that this episode gave you some takeaway that has left you inspired and motivated to keep pressing forward on your unique path. Make sure you subscribe so you don't miss out on any future episodes. And of course, your reviews on Apple are greatly appreciate it. You're a small business owner, ready to start making data driven decisions in your business. And you know that without the data, you're really just guessing, make sure to visit my website, the516collaborative.com. And let's schedule a time to talk to make sure that you can harness the power of data in your business. I'll see you next time. Bye.
Meet Kiva Slade - the Founder and CEO of The 516 Collaborative. With a unique background in high-power politics on Capitol Hill and sixteen years as a homeschooling mama, Kiva found her calling in the online business world as a trusted guide for entrepreneurs looking to build the business of their dreams.
Kiva's work began behind the scenes, orchestrating the back end of businesses and managing teams. But her inner data diva couldn't help but notice that small businesses needed help harnessing the power of data for growth. So she and her team set out to uncover and tidy up the data required to enable clients to grow their businesses confidently and easily.