Startup Dox

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Ask a Lawyer:Business Scenarios

Dear Startup Dox:
Lately, I’ve been thinking through how COVID has affected my business and how I was so unprepared! Obviously, I don’t want this to happen again – but what can I do now to “protect” my business, in 2023 and beyond?
– Signed Contemplative but Cautious

  1. Why this matters: Being prepared before Worst-case Scenarios allows you to breathe easy and weather the ups and downs of entrepreneurship
  2. What you need: Your honest review of the past and possible scenarios that may happen.
  3. Who you need: YOU and your honesty, Attorney and Accountant
  4. Learn more here: Business Protocol Workbook (download it for free here)

Dear Contemplative and Cautious,

If you’ve survived (or surviving…?) COVID you also know that our businesses and personal lives have been completely upended.

And, as all emergencies are – it was shocking and unplanned.

Morbid as it sounds, we as business owners can learn from COVID to prepare for our own business.

What happens if you, as the CEO, are out of commission?

It’s all-important that you have back up procedures in place should certain scenarios happen.

The show and the shop still have to go on.

In fact, Cautious, preparation is another key expression of the preservation of PROFIT.

It’s even more important if you’re a solopreneur that you’re protected should something happen to you, as the sole owner, creator, manager, operator of your shop.

We all know the big events that can stall or stunt a business: owner’s death, disability or family illness/death.

What about the lesser-known business emergencies such as: extreme weather, materials delay, worker strike …or even global pandemics?
Every business owner should have answers to these questions.

Before we even consider any Protocols, it’s usually recommended that your business have 3-6 months of business operating expenses saved as an emergency fund for non-profitable periods, in addition to any Protocols you create here.


Time to get serious!

Brainstorm the possible “What if?” scenarios in your life AND business.

Then create possible actions or protocols that will be triggered if a particular scenario happens.

The protocols you should consider depend on how dire you want to get.

Here are the most common triggers such as: death, disability, illness in family.

Consider common business triggers such as: materials/labor shortage, extreme weather, and global pandemics.

But, it really is up to you as to how complex you want your protocols to be to the triggers you define.

Just remain reasonable with your demands of your teams.

  1. Death
    What would happen to your business if you pass away? Who will take over? Will the business dissolve or pass on to the successor through succession?
  2. Disability
    There’s temporary disability and permanent disability.For example, if you break your leg, but can still do your job – generally you are in a brain-based business, and this is a temporary disability.However, if you are in a coma – you will NOT be able to run your business, and this may trigger permanent disability and or succession.

    There is disability insurance that may cover this.

  3. Family illness/leave of absence
    Your leave of absence may be due to an illness in the family where you may be a caregiver, or a personal need to step away, i.e., burnout. Consider the time limits for your protocols for 90, 120, 180 days?Some medical care plans also allow for this – check your insurance plans.
  4. Materials/labor shortage
    What happens if you can’t source any materials or have employee/contractor shortage?What kind of processes or other sources of labor can you have as backup?
  5. Extreme weather
    This is obviously geographically specific to your region but consider your most common weather scenarios….then 5x that.What if you had hurricanes for 2 weeks or snowstorms for 2 weeks or more etc.
  6. Global Pandemic
    In summary, the pandemic was really materials/labor shortage and accessibility. It led to a downturn in the general economy and most industries.How can you have a plan to pivot quickly should this happen again?
  7. (Insert Your industry emergency here) Future planning.
    What has been a recent shakeup in your industry?Learn from other people’s mistakes and institute a plan for that.Where do you see your industry evolving or phasing out within the next 2-3 years? Plan for it.


These team members may not own equity in your business (except for successor after succession) but they are necessary components of your business success.

Your Legal Representative(s) & Successor(s) are triggered by the protocols.

Your Business Dream team should be in place TODAY. Your Internal Business team is your immediate partners (that own equity) in your Company. Your external Business team is your Accountant, Attorney and Insurance Agent.


After you create protocols, and identify your Business Dream Teams, make sure you convey these to your attorney & accountant.

Let your Legal Representatives & Successors know what may be expected of them should an event occur.

Know the coverage limits of any business insurance policies for your business.


After completing your Protocols, summarize your wishes in a Sole Operating Agreement and mimic in your Standard Operating Procedures (SOPs) so your internal team members know what to do.

Generally, these protocols of death and disability may already be included in your LLC operating agreement OR Corporation Shareholders/Bylaws.

But, if you are an unincorporated entity such as a sole proprietorship OR general partnership, this is very important for you to create a simple Sole Operating Agreement to share with your attorney and accountant!

Cautious, setting up a plan may seem arduous at first, but once done – the relief that you have a Plan B (and C, and D) is amazing.


1. Answer the 7 Protocols

2. Identify your Dream Team

3. Inform your Legal Representatives and Successors

4. Summarize your OP. Agreements and SOPs

To your success,
Startup Dox CEO & Lead Attorney
Sankeetha Selvarajah, ESQ

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