Every family business owner dreads the “what if” scenarios that could instantly change everything.
- What happens if the CEO suddenly becomes incapacitated?
- What if a key family member dies unexpectedly?
- What if spouses are involved in the same accident?
While these situations are uncomfortable to contemplate, having a robust emergency succession plan can mean the difference between business continuity and complete disruption.
Unlike traditional estate planning, which typically unfolds over years with phased leadership transitions, emergency succession planning prepares a business to respond instantly when a crisis occurs.
Emergency vs. Traditional succession planning
Traditional succession planning is a gradual process involving planned retirements, mentoring and development of future leaders. The transition occurs in a planned and methodical manner.
Emergency succession planning, by contrast, is immediate, addressing unplanned sudden events like death, disability or disappearance of key leaders. These plans must be actionable without delay, clearly documented, and legally enforceable without lengthy deliberation or family meetings.
8 steps to build an emergency succession plan
Step 1: Identify critical roles and decision-makers
The first step is to clearly identify which roles are critical to the functioning of the business, not just in the long term, but now.
Start by mapping your organisation’s critical positions—those roles whose sudden vacancy would severely impact operations. This typically includes:
- Chief Executive Officer/Managing Director
- Chief Financial Officer
- Key operational and technical managers
- Sales and business development leaders
- Senior advisers or long-term employees with vital relationships
Document the responsibilities, critical relationships, current projects, and dependencies tied to each role. It’s also wise to identify any non-family employees who possess significant institutional knowledge or who maintain long-standing client or supplier relationships—these individuals are often instrumental in stabilising the business during a transition.
Step 2: Create a leadership decision matrix
In an emergency, clarity around who is in charge is absolutely vital. The last thing a business needs in a time of uncertainty is a power vacuum or confusion over authority.
Your leadership decision matrix should clearly outline:
- Immediate Authority
Who is authorised to make critical business decisions in the first 24-48 hours following an emergency event? - Short-term Leadership
Who will lead the business in the first 30-90 days, until a longer-term solution is implemented?
- Board Involvement
At what point does your board or advisory council step in to offer oversight, support, or direction?
Competence in a crisis is paramount. Give consideration to include both family and non-family members in this matrix. Sometimes the best emergency leader isn’t necessarily the obvious family heir, but rather the most competent available person who can stabilise operations.
Step 3: Establish the necessary legal documents
It is not enough to simply agree on a plan. That plan must be legally valid and ready to be implemented at a moment’s notice. This involves working closely with your legal advisors to ensure that the following documents are in place and up to date:
- Company constitutions, shareholder agreements, and partnership agreements
These should include clauses dealing with emergency succession, temporary authority, and crisis decision-making. Clarify who has voting power and under what conditions authority can be passed.
- Enduring Powers of Attorney
Ensure that key individuals have designated attorneys who can legally act on their behalf in financial and operational matters, such as signing contracts, accessing bank accounts, and making critical business decisions.
- Insurance Policies
Implement life insurance and disability insurance that provide the business with immediate financial support in the event of a leader’s death or long-term incapacity.
- Buy-Sell Agreements
These agreements should include clear valuation methods, trigger events, and funding mechanisms to allow for the smooth transfer of ownership between family members or partners.
Without proper documentation, even the best-laid plans can be tied up in legal disputes, financial freezes, or regulatory issues.
Step 4: Develop communication protocols
Effective communication during a crisis is not optional—it is essential. Confusion, rumours, or mixed messages can quickly damage employee morale, client confidence, and supplier relationships. Your communication protocols should include:
- Internal Communication
Create clear protocols for notifying employees, family members, and board members. Pre-designate individuals responsible for leading staff meetings or issuing formal updates.
- External Communication
Prepare template emails or press releases for key clients, suppliers, financiers, insurers, and industry partners. Assign spokespersons to liaise with the media and public if necessary.
- Media Relations
Develop holding statements and establish contact with local business reporters or industry publications before a crisis arises. Having media relationships in place allows you to control the narrative when timing is critical.
Step 5: Create operational continuity plans
In the days and weeks following a crisis, the business must continue to function. To ensure continuity, it is vital to put in place systems and procedures that allow others to access operational essentials. Key continuity elements include:
- Banking and Financial Access
Ensure multiple people are authorised to access bank accounts, authorise payments, and manage cash flow. Consider establishing emergency lines of credit that do not depend solely on one person’s signature. - Client Relationships
Maintain up-to-date records of all major client contacts, project milestones, and service histories. Encourage team-based client management to avoid over-reliance on a single relationship holder. - Vendor Management
Keep a current list of key suppliers, account managers, and order histories. Identify secondary contacts who can maintain these relationships if needed. - Technology Access
Use a secure password management system to ensure continuity of access to digital systems, software licences, and data platforms. Include provisions for emergency access by designated personnel.
Step 6: Train and prepare your emergency team
Even the best plans are only as good as the people executing them. Ongoing training and scenario planning can help your team respond with confidence, not confusion.
- Scenario Planning
Conduct tabletop exercises that walk your emergency team through different crisis scenarios. Practice decision-making under pressure and identify gaps in your planning. - Skills Development
Equip designated leaders with foundational knowledge in critical areas like financial management, legal compliance, and crisis communication. - Regular Updates and Review
Schedule quarterly reviews of your emergency succession plan, updating contact information, legal documents, and operational procedures as your business evolves.
Step 7: Financial preparedness
Your business must be financially prepared to operate without disruption during leadership absences. This includes:
- Emergency Fund
Maintain access to funds that can cover 3–6 months of operating expenses if normal decision-making is interrupted. - Insurance Review
Regularly assess insurance coverage for key personnel, ensuring it reflects current valuations, income contributions, and business scale. - Banking Relationships
Build and maintain strong connections with multiple banking providers. Discuss your succession plan with them to ensure access to finance during a transition is not compromised.
Step 8: Integrate family governance and dispute resolution
For many family businesses, the emotional dynamics of a crisis can be just as disruptive as the operational ones. That’s why integrating family governance protocols into your emergency succession plan is critical.
- Clarify the role of the Family Council
Determine whether and how the family will participate in emergency decisions, and ensure this is clearly documented. - Next Generation Readiness
Evaluate whether younger family members are in a position to step into interim roles and provide accelerated development opportunities if needed. - Conflict Resolution
Establish clear processes for resolving family disagreements that might arise during emergency situations, including mediation and arbitration provisions.
Planning now, protecting later
Emergency succession planning is not about fear, it’s about responsibility. It’s about ensuring that the people who rely on your business, like your employees, your clients, your suppliers, and your own family, are protected, in all circumstances. When done properly, an emergency succession plan delivers far more than operational security. It offers peace of mind, professional credibility, and a deep sense of preparedness that enhances your business reputation.
If you’re a family business owner in WA, now is the time to act. Speak to our estate planning lawyers in Perth about putting the right legal protections in place.
Your legacy deserves nothing less.
