Planned Departure

Why SMEs need to think about continuity planning

Anand Ramdeo, director and co-founder of digital estate planning firm Planned Departure, discusses the need for succession planning. Original here.

You are the inspiration and the driving force behind your business and you have a work ethic like very few others.

In your organisation you are expected to be all things to all people: to provide your employees with the resources they need when they need them, to meet their career development expectations and to have your finger constantly on the pulse, 24/365.

Even though there are a hundred and one things you have to concentrate on, you’re on top of everything. The sheer buzz of running your own business just doesn’t fade.

It’s a familiar story with many company founders. Yet, as thorough in their management approach as they are, one crucial area that is all too frequently overlooked is continuity planning. Also referred to in many instances as succession planning, it is an issue that has become hugely important, particularly in this digital era.

Succession planning is more commonly defined as the management process for identifying and developing internal people who have the potential to fill key business leadership roles in the company. As the company expands, sales increase, key people depart and promotional opportunities arise, succession planning (if done right) should ensure that properly trained and developed people are on hand to fill new roles, ensuring the continuity of the business.

The advent of digital has given us unprecedented access to new markets and new customers, even during one of the worst global economic declines in living memory. Today, we are able to generate vast amounts of data in the blink of an eye, information that enables us to effectively communicate with our existing customers and stakeholders, attract new customers and remain competitive.

Digital assets in continuity planning

With all this often critical information, what consideration is given to the company’s digital assets in continuity planning? For most organisations, the answer is very little. By their nature, digital assets are more dynamic and evanescent than physical assets, and this is one of the issues why they are not ‘protected’ in the same manner as physical assets.

Digital assets are defined as any property that can be found in digital format and the list can be very extensive. They include such things as websites, email accounts, online bank accounts, passwords, social media accounts, digital photos, videos, films and music, databases, digital contracts and receipts, and much more. In the UK alone, the value of individuals’ digital assets has been estimated at £25 billion! Furthermore, the vast majority of these assets are stored on media that do not belong to the asset owner but a service provider. This issue is compounded by the fact that service contracts are often terminated when the customer dies, leaving the rightful inheritors with enormous difficulties getting access to the stored assets.

As the founder of a business, consider for a moment what the importance of your digital assets are to the company and how, in the event of your permanent incapacity or death, your employees might continue to have access to these assets in order to maintain a viable business operation. For example, you may have decided to digitise your intellectual property – technical drawings, plans, schematics etc – and store them in the cloud (on a remote server). Would your staff be able to readily access this material if you died?

The sudden loss of access to digital information may not be confined to just financial loss, it can also create an intangible loss of goodwill with customers, suppliers and others. The importance of business continuity planning in its broadest sense starts to become much clearer.

The rapid and ongoing changes to our business environment in this digital era mean that we are generating enormous amounts of data with little regard as to how this material should be effectively stored and protected. Particularly with start-up businesses, there often appear to be more important issues to concentrate on as the organisation develops.

This is where business founders can be at their most vulnerable. They need to be very disciplined at the outset to develop an inventory of their digital assets – an inventory developed in such a way so that it can be regularly and easily updated. Issues relating to ownership and licensing, the location of these assets, who can access them and how they can be accessed, must be described.

Digital inheritance should also be clearly established at this time to address the event that the owner becomes incapable of caring for those assets (through death or permanent incapacity). This is crucially important because, from a legal standpoint, digital data do not comply with the same characteristics of physical assets. Furthermore, the proliferation of data on a multitude of devices – smartphones, tablets, remote servers, laptops etc – can be a further challenge to the issue of lawful inheritance of digital assets.

All information in one place

Once the digital inventory, right of access and inheritance have been established, the next step is to ensure that all this information is contained in one place (such as a digital vault), preferably with a digital estate planner. This should provide the asset owner with the assurance that, in the event of their death, there is a secure and guaranteed method of notifying data heirs even if they are only reachable via electronic channels.

Digital assets should not be included in a written Will because, as a legal document, every time there is a change made to these assets, it has to be updated, signed and witnessed. This can turn out to be an expensive and time-consuming process, particularly since there are more affordable and easier ways of protecting your digital assets and ensuring that they are legally passed on to those you want to inherit them following your death or permanent incapacity.

Today, we live and work between two worlds: our physical environment and the virtual environment of cyberspace. For many start-ups in their early stages of development, the subject of digital assets will not generally be cumbersome, their existence and ownership being very transparent. However, as the business progresses, the volume of data generated increases and social media use expands, the issue of digital property can become significantly more complex. For business founders wishing to ensure that these assets are left to beneficiaries who will actively manage and protect them for the benefit of the organisation, their inclusion in continuity planning is crucial.

Eleanore

Eleanore

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