NEW YORK (AP) — It never crossed Siri Eklund's mind what would happen to her online photography business if she were to die.
Then she had a rude awakening.
Eklund, 39, who owns and runs Two Bright Lights, was hit by a car as she walked to her San Francisco office.
She was able to walk away from the September accident with relatively minor injuries. But the next day, she realized that if she had been killed, there was no plan to keep her company running.
"To have it all disappear would be upsetting," says Eklund.
Thinking about death is no fun, but small business owners need to plan for what will happen if they die. Many owners run their companies solo and have employees that depend on them for income. A plan can help keep a company going after an owner dies.
Eklund started working on a plan the day after the accident. Her company, Two Bright Lights, connects photographers with editors of wedding and other lifestyle magazines and websites that need images. Photographers upload their pictures to her website and editors can select which ones they want to publish. Eklund started the company in 2010. She has 10 employees, but she handles most of the higher-level decisions on her own.
She wrote up a document that would put her father in charge of the company temporarily if she were to die. Her lawyer has a copy.
She also took out a $1 million insurance policy on herself. That money would give the business enough cash to find a replacement for her, Eklund says. The policy costs about $400 a year. "It's not a huge expense for the business," she says. "It's a no-brainer."
Getting an insurance policy is a good idea for a business owner, says Avi Kestenbaum, a tax and estate planning attorney and partner at New York-based law firm Meltzer, Lippe, Goldstein & Breitstone. It can cover death taxes and other costs that may come up after a business owner dies. It also helps protect the business.
Business owners who haven't started a succession plan need to sit down with an estate or corporate lawyer, Kestenbaum says. Legal documents that clearly state who will inherit ownership of the business and who will control the company are a must, he says. In some cases, that may be two different people.
Kestenbaum says owners should also write down their wishes for the business and how it should be run. That document can also be shared with key employees. "They want to know they'll still have a job," he says.
Owners avoid death planning for many reasons — the expense of a lawyer, squeamishness about death and some are very busy running their businesses, Kestenbaum says.
Eklund is still recovering from the accident, and getting treatment for whiplash, a frozen diaphragm and other injuries. She says she's lucky she was able to walk away from the accident.
"I hope other small businesses think about it before they ever need it."