What if something happens to you as agency owner?

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Chip Griffin: Hello, and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And Gini, today I’m gonna hit you with a bus. Drive right over you.

Gini Dietrich: Oh, well, great. Can’t wait.

Chip Griffin: I hope you’re ready.

Gini Dietrich: Oh, I, I’m ready.

Chip Griffin: Right after this.

Oh, I, I won’t do that. That would be –

Gini Dietrich: Hopefully you don’t actually hit me with the bus.

Chip Griffin: Hopefully, hopefully not. I mean, that would be mean. And also, I mean, this is like a highlight of my week to get to record this podcast. So I, I’d lose that.

Gini Dietrich: And you’d have to find a new co-host. That would be really terrible.

Chip Griffin: Or I’d just talk to myself for…

Gini Dietrich: you could do that too.

Chip Griffin: 20 minutes. I could do that too, but that’s, it’s probably not as much fun. so. Yeah, well, you never know. You just, you you don’t know. So , today we are, we are talking about being hit by a bus. It’s not a fun topic. It is, it is though, I think an important topic because a lot of agency owners haven’t given any thought to what happens if something happens to them.

Yes. And and, and I would also say, while we’re gonna be talking about this in terms of agency owners, it’s true really of any key employee. So, , just like you need to have a hit by a bus plan for yourself. You need to be thinking about this if you’ve got someone who’s the reservoir of knowledge for something in particular in your business.

So, yep, you can apply these lessons there as well. So let’s say that you are one of those really proactive people. You do have a hit by a bus plan already for yourself. Make sure you have it for the team around you as well. It doesn’t necessarily need to be as detailed because the problems tend to be smaller and more easily dealt with.

but it’s still important for some of the things that we’re gonna be talking about today.

Gini Dietrich: Yeah. And I think it, I think it’s important because I think probably many of us think about it like, what happens if, but we don’t have the plan in place. And, and I, you know, this isn’t a super fun topic because we don’t, we, we don’t like to think of ourselves as, as going anywhere or having anything happen that would, that would prevent us from, from working.

But the fact of the matter is that every single one of us is going to have that happen and whether or not we’re prepared for it is what we’d like, what we need to talk about today.

Chip Griffin: Right? And, and there are a lot of simple things that we don’t think about that we can do now that will make things a lot easier if something does happen to us. And, and by something happening, we’re not always talking about death. In fact, in some ways, that’s the neatest and cleanest and easiest.

Gini Dietrich: Fair, because you don’t have to worry about it!

Chip Griffin: In part because you can say, Hey, ain’t my problem anymore! Not my problem. Someone else can deal with this. Most of us probably aren’t quite that blase about it, but.

The, the most difficult is actually if something happens to you and you become disabled in some fashion where you are unable to execute on the business in any form, but you still want it to take care of you and you still want to have access to your funds and all of that kind of thing that are tied up in the business, and all of those things become more complicated if you haven’t planned in advance.

Gini Dietrich: Yeah, and I mean, anything could happen. Like I have a, a very close friend who the day before Thanksgiving, he had a headache and he had a fever and his fever got to 104 degrees. So he went to urgent care. And urgent care was like, take some Tylenol and go to bed. So he did, and it got progressively worse overnight.

And he, so he went to the emergency room and it turns out he has leukemia and he’s been in the hospital since Thanksgiving day and we’re recording this at the end of January. So, you know, he hasn’t been able to work, he hasn’t been able to show up for clients. He hasn’t been able to do any of those things.

He’s been able to lie in a hospital room and sit on Facebook because that’s about all he has energy for. So he knows everything that’s going on. But, the point is, is that like anything could happen. And he’s lucky in the fact that he can, he’s been able to sort of offload things to his second in charge and give them, you know, bank passwords and all that kind of stuff to be able to access it.

But you, let’s say that he were Damar Hamlin who had the heart attack during the football game and was out of commission for five days. Like you – there’s no, you can’t, you’re, when you, when you’re in a medically induced coma, you can’t give out passwords and, and make sure your second in charge is have, like, so things happen and we have to be prepared for those things.

You know, in my case, my husband has the passwords to the bank accounts. And I don’t know whether or not that’s the right thing to do, but that’s how we’ve done it in, in my business just because I don’t have a second in charge that would be able to access those kinds of things. So that’s how we, we’ve done it. But insurance, disability, long-term, short term, life, all those kinds of things you need to be thinking about for when, because it’s not if, it’s when this happens, something happens.

Chip Griffin: Right, and, and it may or may not happen when you still own your business and, and all that, but I mean, you know, the, the only certainties in life are death and taxes, right? So we, we, we know it’s going to happen at some point, you might as well prepare for it.

Now, I think the, the most obvious thing that you need to be thinking about are passwords, whether that’s for your bank account or if you’ve got a team, you know, access to, you know, whatever software that you’re using to keep the business running. So you need to make sure that, that you’ve got that information either already in the hands of people or there’s some way to do it.

So a lot of these password managers have things where you can have someone else get access if they request, you know, approval and you know they don’t hear from you within a week or whatever, they say, okay, well something’s happened to so-and-so, so now you can get access or, I mean, heck just put it on a piece of paper in an envelope.

I mean, in, yeah. In one of my early businesses, I had an envelope in my desk that said hit by a bus. It was sealed and it had some key passwords and other information that my business partner or others might need in, in the event that something happened to me and the key people knew where it lived and they could go get it.

It was very low tech. This does not have to be something high tech. So passwords are the most obvious. I think they’re the things that people think of the most, but the other thing that you need to think about is who are your authorized contacts? Because just having the passwords not be enough. Yep. And so with something like a bank account, we often think, oh, well, we’ll just give you the, the login information.

Well, that’s great, but you may not be an authorized signer. Right? Since we do so much electronically these days, you can kind of get away with that a lot, but it’s still, at some point you’re probably going to need to have signing access to a bank account. You’re gonna need to be an authorized person for the, the insurance company that has the insurance for all of your employees.

I mean, we, we just had a situation in my own business where we were trying to, you know, have, do an administrative change to something and so my wife called to, to get it done. She couldn’t, because she wasn’t listed as authorized on it. And it was something, it was, frankly, it was trying to electronically pay the bills instead of doing them by paper check.

Because we’ve had the, the account so long we’ve stuck with paper check, but it’s the last paper check we do, we don’t wanna do it anymore. Right. They wouldn’t even talk to her to let her pay the bill. Wow. So you need to think about those things because for example, I mean, let’s say it is the health insurance.

Let’s say that you, you the owner are in a coma, you’d kind of like that health insurance to keep going. If your team isn’t, doesn’t have someone who’s authorized who can contact them and be able to pay the bill, you’re in trouble. Yeah. So think about those things.

Gini Dietrich: Yeah. From, from that perspective, we have our accounting firm do all that. So they can, they can make the, they can pay the insurance bills. They can, they, they’re a signer on the account so they can pay all the bills as well. And so it doesn’t necessarily have to be somebody that works for you. Because for, for me, you know, I was afraid that we would lose that, that if the person left that had access, we would have to go through that whole process again.

So I just did it so that our accounting firm handles it all. And then I don’t have to worry about if someone leavesm quits, and then I have to go through that whole process of reassigning somebody else. So there are lots of ways that you can do it, that, you know, if somebody just hits the easy button, so to say, you all those things are taken care of.

Chip Griffin: Right. And, and in our case, we actually have an insurance broker that, that we were able to work through. Great. So I didn’t have to sit on hold with the insurance company to, to authorize Jen. Yes. I just said to the broker, you guys deal with this. Yes. So, so, so there was already a backup plan of sorts in place.

But you know, you, you, you wanna make sure that you’re thinking about that for all of your key accounts, whether that’s payroll, whether that’s banking, whether that’s benefits, there are a lot of things that are important to you as the owner or to your estate if you pass away that someone needs to have access to.

And it gets really complicated if you don’t have that access.

Gini Dietrich: Yeah. And then I would say the other thing you need to be thinking about, especially for agency owners, is what happens with clients? So let’s say that you’re my friend who was diagnosed with leukemia on Thanksgiving Day and went, you know, has been in the hospital for almost three months.

Well, a little more than three months. What do you do in that case with clients? And, you know, most of us, because we’re the agency owner, our client facing, and some of our, some of our accounts are run by our team and some of our accounts, you know, some of, like on our, on my side, some of our high-paying and crisis accounts, I interact, I’m face-to-face with, right. And then some of the other stuff where we’re just doing the execution in day-to-day work for clients. I don’t, I, I pop in once a month for conversations with the CEO, but I don’t necessarily, I don’t have the same day-to-day face time that I do. So those would be okay.

It’s the clients where I have day to day facetime that I have to be thinking about how those things work.

Chip Griffin: Yeah. And, and, and, and it’s important to think about how you communicate these things too. And, and we’ve talked a lot on this show about how we are all communicators, yet we are typically very bad when it comes to our own communications.

Yes. Whether that’s internal or external. And so it, it can be difficult, you know, particularly if you’re in a situation where you have, you know, some sort of illness that’s gonna keep you on the sidelines for a long period of time. There are some people who are not comfortable talking about that for whatever reason.

Yes. There are other people who, you know, live more with an open book style. I’ve gotta tell you, I think the more transparent you are in general, the better because people pick up on things and if you kind of start disappearing, they, they, they will fill the gap of knowledge by making stuff.

Gini Dietrich: Yes, they will. That is true.

Chip Griffin: Now that said, it’s not, I, I will say that, that there are risks. You know, I, I think many people know that I’ve had two heart surgeries for an irregular heartbeat over the last, I dunno, 20 years or so. And in one of those cases where I was transparent about it, I know I lost some business as a result because there was a prospect who was concerned about my ability you know to go forward on the project as a result of that. And, and it was silly because, you know, I was very transparent about what it all meant. And it was, you know, basically a day long procedure kind of thing. And you’re back to normal from a, at least from a mental standpoint right away, and all that.

But, but still, I know it can impact things so people are hesitant, but I would still encourage you be as transparent as possible because otherwise people are gonna wonder, they’re gonna guess and, and that’s often worse.

Gini Dietrich: And way worse. Yeah. Yeah. Yeah. And I think you have to. I, you, I think this is unfortunate, but I think you do have to be ready to lose some accounts because even when you say, well, nothing’s going to change because so and so is your day to day, and like all of that’s still going to be the same, for some reason, they get this thing in their head where they’re like, oh, but is it really?

And what if they’re back there be, you know, behind the scenes doing things that we don’t know and, and then they start to, you know, sort of catastrophize almost. And then you, so I would, I would say be prepared to lose some clients over it, which sucks. But you have to understand too that this is business not personal.

Chip Griffin: But, but this is yet another reason why as an owner you shouldn’t tie yourself too tightly to your clients. Yes. Yes. And you need to make sure that you’re involving your team, even if you are a solo owner and just using contractors, get more people in front of the client on a regular basis. Yes. So that, because look, clients have real issues when the owner disappears from an equation if the owner is deeply involved, but they don’t have the same reaction most of the time when it’s an employee or contractor.

Yep. Yep, yep, yep. And so the more that you can divorce yourself from that day-to-day client work. The, the more that you can preserve those kinds of relationships, even if something does happen to you, and so you, it, it’s really an argument for doing what you should already be doing anyway. But it will certainly help you in your hit by a bus planning as well.

Gini Dietrich: You know, one of the things I like to do is take time off like everybody else, and I prepare the team so that I can take time off and I’m not constantly bombarded with emails and text messages and Slack messages and you know, I need this and I can. So I prepare the team and then when I come back, I expect them to continue to be working in that manner.

So nobody misses me. It’s great . And the first year I did it, I was like, Wait, nobody missed me. What did, and it sort of, your ego is sort of burned a little bit. And then I thought, well wait, this is great. Now I’m gonna go focus on business development because I have time to do it. They can continue doing this work.

I can take time off. It’s not a big deal. If I’m hit by a bus, it’s going to suck, but it’s not going to be to the detriment of my business.

Chip Griffin: Right. And, and I think all of this planning helps. I think that, you know, you also need to be thinking about the financial aspects of, you know, what, if something happens.

So this is why you need to be thinking about making sure you have cash reserves as a business, particularly, particularly if you have employees, because, you know, even if you’re hit by a bus plan, is that you’re gonna unwind the business. Let’s say you’re a solo owner, a small team, and you say, look, I don’t, I don’t really want to, I don’t have an obvious successor.

And so, so my hit by a bus plan is just to, you know, to have an orderly shutdown of the business. It should be orderly. Yes. And so you need cash to have it happen in an orderly fashion and to treat your team well. And we, a lot of agency owners love to say, well, you know, my, you know, we’re really a family here.

First of all, you’re not, we’ve had that discussion. Right. But secondly, if you’re gonna say that, at least try to take care of ’em a little bit and don’t have, you know, something happens to you, means something effectively has happened to them. I mean, this isn’t ancient Egypt and we’re not, you know, burying our team with us.

So, you know, you, you need to, to be thoughtful about those kinds of things. And so having a cash reserve, thinking about things like insurance are, is important. Insurance, certainly disability insurance is probably the most important to think thing to think about. Yes, because yes, frankly, death is, as we said earlier, it’s the cleanest, it’s the easiest.

It’s when you can’t work. If you, if you, you know, if you’re in that, you know, medically induced coma or unmedically induced coma, whatever. Those are the times where you want to have something that’s, that’s continuing to, to provide financial stability. So think about not just life insurance, but also disability insurance.

Gini Dietrich: And I would add to that, that one of the things that you and I have talked about on this podcast before is if you’re looking to sell your business, eventually, you have to, you have to have in there a salary that’s for yourself, that’s worth, you know, because, a possible acquirer is not gonna look at your business and, and profit and go, oh, they’re super profitable.

But wait, they’re not, they’re not paying themselves a salary. And the same goes for that with disability. So, In short-term disability, you get a certain percentage, and in long-term disability, you get a certain percentage. So if you’re not paying yourself a living salary, if you’re paying yourself $30,000 a year, you’re gonna get 60% of $30,000 and that’s not going to help you.

So really be thinking about as part of your hit by a bus plan, how do you start to build that fund up so that you’re paying yourself what you would be paid if you worked for a corporation and make that relevant in your own business because then it serves multiple purposes. But in this scenario, if you are paying yourself $250,000 a year, now your long-term disability is going to pay 60% of that instead of 60% of 30,000.

Chip Griffin: Right. Right. And so the, these are all things that you want to pre-plan for. And if you’re… you know, most of what we’ve talked about now applies for agencies of any kind, whether you’re a sole owner or you have a partnership. But this is something you also need to be thinking about in a partnership in a little bit of a different way, because in some respects it’s easier when you have partners because you’ve now got someone who you know logically would take over running the business from you. Let’s say there’s two of you. But there are also some complicating factors in there, some of which we’ve already talked about as far as making sure that authorized signers are in place.

It’s not uncommon in partnerships to have just one partner who is the signer on the bank account, for example, just because it was more convenient. You didn’t have to fill out the extra signature card, all that kind of stuff. Make sure that that’s not the case. Make sure that you’ve got additional people having access to everything.

Make sure that, that your partners, partner or partners are listed as authorized contacts, all those kinds of things. Yes, yes, yes. But you should also, this is where you should also be thinking about insurance in a different way, which is do you have key person life insurance in place? So, and key person life insurance in a partnership serves two purposes.

One is it can provide funding for the business so that the work that you’ve been doing for the business, they can hire someone to, to do in your place. Because if, if you’ve been providing client service and you have a particular expertise that maybe your partner doesn’t have, or even if it’s just a workload thing, they’re gonna have to absorb that.

Now, that is not a cheap thing to do, particularly because now you’ve got a situation where your estate would own part of the agency. Which means that it’s a drag on the profits of the business because it’s still, presumably, depending on how you’re set up, entitled to a percentage of the profits. Let’s say you’ve got a 50 50 agency and you can go to my website and find out why you shouldn’t have a true 50 50 agency, again, topic for another day, but so now you’ve got an estate that owns 50%, takes 50% of the profits.

But is doing nothing to contribute to the economic growth of the business. And so typically when you have a partner die, you want to buy their estate out as quickly as possible in order to move that along. If you have key person life insurance on a partner, you can use the proceeds typically to buy out the estate.

Gini Dietrich: That is really great advice.

Chip Griffin: And so it positions you in a much better place. But these are things that you want to be thinking about well in advance so that you can be prepared for them and you’ve gotta, and, and frankly, a lot of this is necessary because partnerships don’t think these issues through very well at the beginning.

Right? Yeah. And, and so, so think these things through, but probably you need to do the earlier steps, which are, have the proper partnership agreements in place. Because a lot of the partnerships I talk to don’t, they have very basic, you know, templated type stuff, but it hasn’t thought through all of these different scenarios.

And you need to make sure that your paperwork as a partnership addresses what happens if you’re short-term disabled, long-term disabled, die, divorce, all of these horrible things you don’t wanna spend a lot of time dwelling on, really, really matter, even more so in a partnership because it’s impacting a whole lot more people.

Gini Dietrich: Yeah, I mean it’s, it’s crisis planning is what you’re doing. Yeah. You’re, you’re looking at your different scenarios. You’re tearing them out and you’re saying, okay, in this situation, we’re gonna do this, this, and this. This situation is worse. We’re gonna do this and this, and this is catastrophic and this is how we’ll handle it.

And unfortunately, Just like our clients, we don’t worry about crisis planning insurance until we need it, and then that’s too late. So really be thinking about those things right now. I think thinking about it about key person insurance is really great advice. And really, you know, think about everything from can someone pay my bills and access my bank account and deposit checks to do we have, do I, do we have the insurance that will cover me and my core team?

And you know, what happens if, God forbid I do die, and what happens to the business and my employees and all that.

Chip Griffin: Yeah, and the the final thing I would say is just keep it simple. You don’t need to overcomplicate this. You don’t need to imagine every single possible scenario and work it out, because if you figure out just a handful of them, you can probably take the steps necessary to make sure that you’re in a good enough place if the worst happens. And so, you know, I, one of the things I do see is people get, you know, wrapped around trying to figure out, well, okay, well, but, but what happens if this lasts for three months or five months? Or seven? Don’t worry about that. You cannot foresee every possible outcome and scenario. Right. So just try to deal with a couple of the big ones and that will probably put you in good position for you and your business to move forward if and when it happens.

Gini Dietrich: Yep. That’s really good advice. Not something we want to be thinking about, but something we have to deal with

Chip Griffin: Yep. It, it is necessary. It’s, you know, as a business owner, sometimes we gotta think about things we don’t want to think about. That’s right. This is probably number one on the don’t want to think about it list, but I’m encouraging you to do that.

Gini Dietrich: Necessary. It’s necessary. Do it.

Chip Griffin: Necessary. Alright, on that note, we will draw this episode of the Agency Leadership Podcast to a close. I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich.

Chip Griffin: And it depends.