You’ve been in business for a while. You are working hard to continue to grow and prosper, but have you given much thought as to whom you’ll eventually pass the keys to your business?
In ideal situations, you should have a succession plan in place before you open the doors of your business. In reality, few small businesses have one.
Unlike large companies, small businesses and partnerships often fail without a solid succession plan when the owner or a senior-level partner retires, becomes incapacitated or dies. Problems can also arise when partners decide to part ways.
Unfortunately, there are many instances where successors inherit a healthy business and then are forced into bankruptcy because they lack the available liquidity to pay debts and taxes. Proper planning helps avoid many of the problems associated with succession and transfer of ownership.
If you don’t have a succession plan for your business, perhaps it’s time to draft one. Remember, it’s not a “one size fits all” process, so consider the following tips:
- Include the succession planning strategy in your business plan
- Don’t wait too long to begin
- Evaluate your retirement savings and insurance
- Assemble a team of legal and financial advisers
- Identify and train a successor
- Discuss succession plans openly with clients, potential customers, and employees
- Revisit the plan periodically and update when necessary
Although no one can know for certain what the future will look like for your small business, creating and implementing an effective business succession plan will result in financial benefits, tax advantages, and emotional satisfaction regardless of what the future brings.
At Law Office of Sativa Boatman-Sloan, LLC & 417 Elder Law, we can help business owners through the complicated process of business succession and provide the expertise to make objective decisions.