Business succession planning is an important part of making sure your company continues to thrive in the future.
Are you a business owner? Do you have a business succession plan in place? If you're like the majority of people, you might not; Inc. magazine reports that an estimated 66 percent of small business owners have no formal succession plan on record. When surveyed, most of those who don't have a plan say that they have delayed planning ahead because they are too consumed with the day-to-day operations of their company to think about the future.
While it is true that your business does need your attention now, it is also vitally important that you think about and accept the possibility of change in the event of illness, incapacity or death of yourself or another of your company's principal operators. Without proper planning, your loved ones could be stuck with estate taxes that necessitate their selling the business, the company could lose substantial value when you (or another key executive) retire or die, and you might not have the structure in place for the business to adapt to changing market needs, meaning that it could fail once you are no longer at the helm.
Keeping things in the family
Business succession planning is crucial if you want your business to stay in the family. Unless you plan properly, it is possible for assets to be sold upon your death or retirement, or to be transferred to a new spouse in the event of a remarriage. This could mean that the business you poured your proverbial blood, sweat and tears into throughout your life could be lost in the blink of an eye.
A business succession plan can help prevent this. A plan can be tailored to meet the unique needs of your company, be it a sole proprietorship, partnership or corporation. The plan can include a number of provisions to minimize the disruption of day-to-day operations while still allowing the business to thrive. This can include:
- Appointment of a successor to make company decisions in the event that you (or another key member of the business) become incapacitated, choose to retire or pass away - this can help prevent operational squabbles that could develop into full-blown litigation or significantly distract focus from the business' operations
- Buy-sell agreements that allow partners' shares to be bought out when they retire (or to be purchased from their heirs to keep control of the company in the family)
- Non-compete agreements that prevent loved ones who choose to leave the company from starting their own competing businesses in the area for a set time
- Tax planning provisions to limit the financial impact that estate taxes could have on the company's bottom line
Business succession planning is something that needs to be considered by all company owners, and the sooner you plan for the future, the better off you'll be. To learn more about ways in which you can act now to protect your company later, speak with the business law attorneys at Wick and Trautwein, LLC. Call them toll free at 866-686-1410 or send an email today.