Wills are legally bound directives that state who will receive your property upon your death…
What will happen to my business when I’m gone?
Does this sound familiar?
You have a great idea for a business. You take a huge risk, work 365 days a year with no promise of financial compensation. You sacrifice time with your loved ones to make sure your business can still run. You lay awake at night thinking of ways to improve your business, provide better service to your customers, or just make payroll. Eventually your hard work pays off and your business becomes successful. You’re exhausted and start to think about retirement. But what will happen to your business?
Small businesses are a huge part of the United States economy and currently represent about 50 percent of the nation’s gross domestic product. Small companies are responsible for 60 percent of the jobs in America and nearly 80 percent of new jobs created. Despite these staggering figures, most small business owners have no exit strategy for their business. This lack of business succession planning can leave your business in a difficult position in the event you become disabled, pass away, or want to retire.
Given the current economy it’s understandable why most people don’t think about a business succession plan. Many small business owners focus their energies on survival, and future growth, rather than a business succession plan. However, developing a business succession plan will help ensure a viable future for your business in times of financial hardship, injury, disability and even death. A business succession plan provides for the succession or transfer of ownership of your business if the unthinkable happens, or if you want to enjoy your golden years.
Most people think of their business like their children. They’ve worked hard to ensure their safety and longevity, and love them even when they’re not doing so well. Like children, every business is different, so there is no “one plan fits all” when it comes to developing a succession plan. But succession planning for almost every family business will have some of the following goals or objectives:
- Determine who are they key players who will step up and run the business;
- Ensure the continued viability of the business by ensuring competent leadership;
- Establish a plan to transfer control;
- Determine how to create a family legacy from business;
- Develop a plan for ensuring succession decisions that are unbiased and fair and based upon family consensus;
- Clarify career paths for family members and provide appropriate training; and
- Provide for contingencies and revision of the plan.
This is a complicated process that can involve many different personalities. That is why it is important to speak with a qualified professional who can evaluate your business structure, understand your goals, explain your options, and help you ensure that your long-term goals are met.
By Eric J. Einhart – Guest Blogger
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