Business succession planning is not just tax and legal mumbo jumbo
As a small business owner, you understand that running a business is tough. You’re not only concerned with running the business today. You’re also concerned with how your business will continue on in the future, including after you’re no longer around. There is a lot that goes into putting together a comprehensive business succession plan. You may have already discussed some of the tax, legal, and insurance issues, but you should consider and vet some important business principles. Even with great legal and tax strategies, and great buy-sell agreements, what is the point of all that planning if the business will evaporate anyway?
Succession planning is a long journey that should be carried on during all phases of the business life cycle, and the plan should evolve as the business evolves. Below are some of the issues that may arise; however, these issues are in no particular order of importance and this isn’t a complete list of all possible issues.
Start Planning Early
Just as you probably started saving for your children’s college education shortly after they were born, you should start planning for the sale or succession of your business after it is “born.” It’s hard to put an effective succession plan in place when you’re 65 years old and ready to retire. This type of last minute planning is often not going to be effective.
Like learning to ride a bicycle, succession planning takes time, determination, and motivation. You must take the time to understand and define your business, family, and individual goals in order to develop an effective plan to achieve those goals. Your goals may change over time so be sure to review them and your succession plan periodically.
Don’t Get Lost in the Maze
While you may know your end goal, without guidance you may get lost along the way, which may delay or hinder the process. Business owners should seek tax and legal advice from estate planners, investment advisors, and insurance professionals – and all of the financial professionals should work together and understand your goals.
Don’t Only Think About it as Retirement Planning
Succession planning is not just about retirement. You may think that succession planning equates to retirement and, therefore, you may believe that you don’t need to do succession planning now. But, if you think about succession planning as the evolution of your business, your success in passing on the business may increase – business owners should understand that it is about building a successful business that can be passed on to the next generation or sold to a third-party.
As you can see, there are many factors and issues to think about when putting a solid business succession plan in place. Be sure to work with professionals to assist you in coming up with an overall plan that will help your business succeed for a long time.
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2021-130696 Exp. 12/23