Although complicated business succession planning simply put is the process of determining how you are going to transfer your business ownership and transition out of the business. All this while maximizing your personal and family financial security.
Why bother with advanced planning?
There are several reasons:
- A poor management transition plan can have a negative impact n business results, and can even result in business failure.
- The value of your business may represent a substantial source of income in retirement. Proper succession planning can help ensure that risks to your retirement capital are minimized as you approach the end of your career.
- If you hope to have your business continued by one or more family members, you will likely need to coordinate your business plan with your estate plan. You will also want to explore any tax deferral opportunities that could benefit you and other family members.
- An unforeseen event-such as the death or disability of you or a business partner- could lead to business chaos without proper planning and financial protection. Advance planning can help ensure that you, your family, and your business are all properly protected, through good times and bad.
Although succession plans will be different for different businesses, there are many steps that are common for any succession plan.
These steps are:
- Exploring your options
- Keeping the business in the family
- Selecting and preparing a successor
- Planning a management buy out
- Determining the value of the business
- Selling the business
- Financing the succession plan
- Understanding the tax and legal issues
- Managing wealth to secure your future