Blindsided by the Five Ds?

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Wendy Claussen

Co-owner,
Horizon Trek, LLC

Human Resources Update

Blindsided by the Five Ds?

How to take the hit and stay standing

I

magine this: You’re on site, juggling subcontractors, schedules, and a million moving parts, when suddenly—bam—you’re sidelined. Maybe it’s a heart attack, maybe it’s a lawsuit, or maybe it’s just life doing what life does best: surprising us. If you’re not around to call the shots, will your business survive the fallout?

Welcome to the world of contingency planning—specifically, preparing for the 5 D’s: Death, Disability, Divorce, Disagreement, and Distress. These aren’t just dramatic plot points; they’re real-world disruptors that can gut a business faster than a faulty backhoe hydraulic line.

Let’s unpack what they mean for you and how you can turn these threats into manageable risks.

— Death —

When the Unexpected Happens

We all know we’re not promised tomorrow, but few of us plan like that’s true. If you’re the sole owner or even a key partner, your death can set off a chain reaction: panicked employees, confused family members, lenders calling loans, and jobs left unfinished. Without a clear plan, even a thriving contracting business can collapse overnight.

So, what should you do? Start with the basics:

Document your wishes. Who should take the reins? Should the business be sold, kept in the family, or dissolved?
Fund continuity. Life insurance can provide the cash your business needs to stay afloat while leadership transitions.
Create a “Stay Bonus” plan. Want to keep key employees from jumping ship? Give them a financial reason to stay during the chaos.

Death doesn’t have to mean the end of your company—but only if you’ve prepared.

— Disability —

When You Can’t Speak for Yourself

A stroke. A car accident. A freak fall off a ladder. If you’re alive but unable to make decisions, does anyone know where your critical business documents are? Can someone else access your systems, pay vendors, sign checks, or keep projects moving?

Disability is uniquely dangerous because it doesn’t always trigger a legal transfer of ownership—but it does trigger a leadership vacuum. To avoid paralysis, make sure you have:

Medical and financial powers of attorney
A clear management succession plan
A buy-sell agreement that addresses disability events, including how and when your interest can be bought out—and how that buyout will be funded.

Remember, if you’re not at the wheel, someone else needs to be—legally and operationally.

— Divorce —

When the Personal Becomes Business

Nobody enters marriage thinking about a courtroom property split, but divorce can be one of the most financially disruptive events a business faces. If your ownership stake becomes a marital asset, your ex could suddenly be your new business partner—or force a liquidation just to divide the value.

To reduce the business damage in the event of a personal breakup:

Understand how your state treats business assets in divorce.
Consider a prenuptial or postnuptial agreement.
Have a valuation method in place (ideally spelled out in your buy-sell agreement).
Keep clean records of what’s personal and what’s business.

It’s not romantic, but it’s realistic—and it could save your company.

— Disagreement —

When Partners Stop Partnering

You started your business with a handshake and high hopes. But partnerships are like marriages—they don’t always last. Disagreements over direction, money, or family succession can create irreconcilable rifts that leave your company paralyzed.

Don’t wait for tension to boil over. Instead:

Build a solid operating or shareholder agreement with clear exit provisions.
Establish buy-sell terms that are fair and current (and regularly updated).
Decide whether ownership changes should be optional or mandatory in cases of retirement, dispute, or firing.

A well-written agreement is like a fire extinguisher: better to have and not need, than need and not have.

— Distress —

When the World Falls Apart

We all remember 2020. COVID shut down jobsites, strangled supply chains, and sent shockwaves through every industry. But global pandemics aren’t the only form of distress. Think cyberattacks, natural disasters, labor shortages, or a recession that suddenly dries up your pipeline.

Distress isn’t always preventable—but good planning can soften the blow:

Invest in business interruption insurance.
Diversify your revenue streams (e.g., service contracts, maintenance, or federal projects).
Build financial buffers to weather lean periods.
Back up your data and document your operational systems so others can step in if you’re sidelined.

The key is to build resilience before disaster strikes.

Five Questions to Get Started

Who will run your business if you can’t?
Does your buy-sell agreement cover death, disability, divorce, and disputes?
Are your key employees incentivized to stay in a crisis?
Do your family and advisors know your succession wishes?
Have you reviewed your plan in the last year?

If you can’t answer these with confidence, it’s time to take action.

It’s Not If, It’s When

As contractors, we’re in the risk management business. We read specs, measure twice, and build with redundancy. Why should running our business be any different? The 5 Ds aren’t meant to scare you; they’re meant to shake you out of autopilot. Contingency planning doesn’t mean expecting the worst; it means protecting the best of what you’ve built.

You owe it to your family, your employees, and your legacy to prepare. Because someday, one of the Ds will show up uninvited. The question is: will your business survive the visit?

Wendy Claussen co-owns Horizon Trek, LLC, a full-service business advisory firm specializing in ownership transitions for privately held businesses. As a certified exit planning advisor and small business owner, Claussen helps clients navigate valuation, succession, and sale. She partners with attorney Nathan Henshaw, a seasoned legal advisor with extensive experience in both litigation and transactional matters for Alaska-based businesses.