If you have a business then you should have a business succession plan in place. Things can happen unexpectedly to anyone, at any age, at any time. If an event should result in your incapacitation or death, a business succession plan is an emergency plan that will ensure that things continue to run smoothly.
Still need convincing? Here are 5 Reasons Why You Need a Business Succession Plan…Now.
1. You need time to find your successor.
If you expect a family member to take over your business, it’s important to start having those conversations now. You should speak to them in depth about their commitment and their goals for the business. This may not be something they even want to take on but it does not mean your business will go to shambles. You could find a management service or potential buyer. If you plan ahead you have options so that you’re family benefits from your business with minimum losses and hoops to jump through.
2. You need time to prepare your successor.
The person taking over will need to learn how to manage and grow the business. This includes building relationships, gaining industry knowledge, and learning sustainability. Identifying your potential successors is something you can do now. Choose wisely. In the right hands, a small business can continue to flourish well beyond the tenure of the original owner. In the wrong hands, it will fold in no time. Finding the right person, whether a family member or outsider, takes time.
Your business can benefit your family without having to be ran by your family…if you prepare for that.
3. You need time to prepare you business.
You have to get your business ready for a smooth transition. This means getting its affairs in order so that it can have sustainability and growth. A starting point is gathering and consolidating important documents and data such as inventory, tax returns, financial records, and valuation data. Keep a historical record for your business. A buyer will want to see these things. Organizing these things also protects the business in the event an owner has to sell unexpectedly or a family member must handle the transition under more dire circumstances. For example, you should document your business processes so that someone new can easily take over. Your employees should get training so they consistently execute these processes as documented.
4. You can manage tax liability.
Planning for business succession now can help you avoid major taxes on down the road. A professional business and estate planning attorney can help you look at business succession planning as part of an overall estate planning strategy. There are things that you can do now that can reduce your taxes later. Planning can make things so much easier on down the road and legal advice can help ensure that you look at all the important aspects in your planning.
5. You can leave a legacy and create generational wealth.
Undoubtedly, you have put a lot of hard work into your business, even if it’s a one-person show, you want it to be in good hands. A small business can grow and a large business can be sustainable. Succession planning can ensure the people that depend on you can continue to get your support.
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