There’s no better time to revaluate your goals and ensure that you have the proper strategies in place. A common weakness to many business owners’ financial plans is the lack of, or even consideration for succession planning.
Did you know that only half of the small business owners have a transition plan and most of those are informal or unwritten plans? If you don’t have a clear understanding of where the finish line is how can you make effective strategic decisions to get there?
As a business owner you spend years of your life creating, developing, and growing your enterprise. You are likely not doing this just to earn a paycheque, rather to create an entity that will continue beyond your working years. Are you hoping that your children, someone else in your family, or potentially and employee will carry on the torch?
If so, how and when will the business be transferred to them; not only from a control standpoint, but what about from a monetary point of view?
Some questions to consider:
- Is the business properly structured to be a salable asset?
- How much will the business be worth?
- Who do you want to acquire and continue operating the business?
- Will the individual(s) acquiring the business have the monetary capacity to do so?
o Will this happen on a single date? Or does it require a specific time period?
- What kind of assets does the business own?
o If you own a building, warehouse, etc. will these be sold with the business?
- What kind of taxable implications will these transactions have?
- More importantly, how does all of this tie back to your personal financial and retirement plan?
These are all questions that you have to ask yourself in order to ensure that your extraordinary efforts and working legacy continues into the vision you have always imagined.
And that is of course if everything goes according to plan!
But what if:
- Either you or your successor were to premature pass away, become disabled, or critically ill?
- What kind of implications would this have on the business’ operations, valuation, client relationships, and even your personal financial plans?
From our experience, we know that you have already considered some of the questions above, but your focus and energy still belongs to what you do best - running a successful business!
As the summer approaches and hopefully you will be able to take some personal time with your family, we encourage you to give some real thought to your succession plan. Better yet, we ask that you to reach out so we can continue to help you map and navigate this complex subject, so we can simplify it and put the necessary actions in place!