Business Succession Planning
Business owners have unique financial planning needs. Whether you're the owner of a large company or partial owner of a family-operated business, you need to make plans for your business in the event of death, injury or disability. Those who plan to have their business continue even when they are no longer involved should consider a succession plan.
What Goes Into Succession Planning?
There are various issues a business owner must take into consideration when putting a plan in place to ensure their business can continue on in their absence. Some of these factors include:
- Interested Parties - Business owners should take into consideration the wishes and abilities of current managers as well as other owners. This is particularly important of the business if family owned. In most cases, it is wise to clearly define the active and inactive roles of these parties.
- Goals and Objectives - Define the overall goals of the business and take into consideration retirement projections for key personnel and management. It is also helpful to do a financial projection including the anticipated future cash flow. This process will allow a business owner to determine if they need to bring in outside help at the time the succession plan is implemented.
- Averting Future Problems - Creating a succession plan means planning for the unexpected. Having a plan in place to resolve future disputes can be helpful as part of your overall plan. Make sure your wishes are shared with family members and parties who will be part of the transition in the event of your absence.
- Estate Planning - Business owners who wish to transfer ownership to another person should prepare a solid estate plan that allows their business to transfer easily to a successor. Tax considerations will play a role in how this is done. In many cases, transferring share ownership to spouses and having a buy/sell agreement in place can avoid many problems later.
Business owners work hard throughout their lives to ensure their business succeeds. In order to keep their business a viable entity when they are no longer able to be involved due to disability or death means having a plan in place for the business' continued success. At Cornerstone Financial Management, LLC we'll listen to your long-term goals for your business and help you put a solid plan in place with the goal of allowing your business to thrive, even when you are no longer present. Click here if you would like to have a financial advisor contact you about your business succession planning needs.