Sustaining business beyond owner- A challenge to SMEs in India

Every Entrepreneur should create a contingency plan to ensure sustainability of his venture beyond himself. Otherwise, it will lead to unbearable misery to his family if untimely death or disability strikes him.

Recently I met one entrepreneur who is having a turnover of less than  Rs. 10 crores. Having established himself and now he is looking to raise the turnover to Rs. 100 crores. The only hitch is financing the growth planned and thus Fundraising strategy was the focus of discussion.   He has been in this business for last 15 years, building the business brick by brick. There is pride, josh, vibration and plan to scale up and of course restless-attributes commonly seen in all successful entrepreneurs.  He is around fifty and his wife is a homemaker, and sons are studying.

The meeting lasted for two and half hours. After meeting I started analysing his business from a risk perspective. While I was picturising he and his business to understand how these two are inter-connected, how his family is placed vis-a-vis his business, and how his company & family can cope with a situation in the event of any unfortunate thing to happen to him, I found hardly there is any sincere attempt to address this risk.

In the next meeting, I confronted him on this count. He initially resisted discussion. When I repeatedly prodded him, he started thinking and kept mum for some time. Suddenly he bent forward and shook my hand and said my business has none to fall back upon if I am not around. After the very long debate, he made up his mind choose a person to the board with the objective of grooming him for a future role in the company.

Risk to self and its impact on business-Ignored by many

He is not the only one to ignore this risk. Nor it is not that entrepreneurs think they are immortal. They are so passionate to pursue their dream that they become oblivion to their own self. The day to day issues in mobilising inputs, raising funds, securing orders, managing the operations etc., engage them fully.

He is very ambitious and the Industry is very promising. He is positioned righteously to capitalise the opportunity. However, like many other entrepreneurs, he is so much personally taking care of things that none else other than he knows the big picture and how the elements are interconnected into each other. There is no trace of organisational structure or corporate governance.  Payables and receivables are known to him only.  Every crucial thing is kept for himself.

If any entrepreneur is in such a situation, death or disability means disastrous consequences to business and family. Unprepared spouses and family members are often left in a precarious situation of intense business responsibility after the sudden death of the owner and rarely know how to handle it.

The end result is-Lifelong struggle to create a great legacy ends in causing unbearable misery to immediate family.

How to deal with this challenge?

Consciously creating Transition Management strategy which includes a contingency plan to address the possibility of an untimely death is an answer to this challenge.

However operationalising such a move is not easy. Discussing such a contingency is earth-shattering for an entrepreneur as everything is planned to see himself in the centre. Visualising a scenario where he is not there is unacceptable and such talks obviously sound unpleasant and tempts to ignore.

The better way to deal with the challenge is to treat it as a part of overall risk management policy of the company. It was wisely advised by experts that when the going is good every firm should work on creating an inventory to risks – list of uncertain events but that can harm if strikes. Hence it is really about implementing a risk management strategy, as at the end of the day you never know. (You may visit RISK MANAGEMENT TOOLKIT FOR SMEs for detailed checklist in

What are the possible solutions?

While the right solution varies for each company and situation, following some of them can be examined:

  • Grooming a family member.
  • Taking a co-founder if the family cannot support.
  • Evolve organisational structure & promote good governance.

Pre –requisites for a successful transition:

  1. Record of Legal liabilities: Keep a regularly updated file of any pending or threatening legal issues and ensure its availability.
  2. Accounts: Keep an updated record of financial information and regulatory filings. This includes access details, pins and passwords for all accounts, offline and online.
  3. Transparency and disclosures: Avoid entangling company in a complex web of hidden transactions that may cause irreparable damage in the absence of founder.
  4. Ring fence the family from business risk:
  • Create wealth for the family: Create a corpus for the family by setting aside savings every year and keep it unencumbered.
  • Life Insurance: For an entrepreneur, life insurance policy becomes less of a luxury and more of a necessity. Ensure all the insurance policies are registered under Married Women’s Property Act 1874(MWP Act); that will give protection to family against any bank or statutory dues.


The costs and pain of setting up the contingency plan are an investment that will not be wasted with God’s grace. That will provide assurance to key people, customers, vendors, lenders and family, and also to yourself should you become disabled. The universal truth is – Reality has to be recognised and that is the precarious nature of life.

( is dedicated to promoting prudent financial management among the entrepreneurs in India.)