BUSINESS SUCCESSION PLANNING FOR SMALL BUSINESSES
What is business succession planning?
You own a small business. It’s been a good ride, but for whatever reason you want to make an exit without harming the business you worked so hard to build.
Business Succession Planning: How should you make your exit?
It doesn’t need to be complicated. It’s a good idea to establish your succession plan as early as possible. If you fail to do it early on, then make sure you do it at least within two to five years of your expected transition.
(Even if you aren’t sure exactly when you will leave the business, it’s crucial to have some kind of plan in place in the event of an emergency situation.)
If you don’t have a business succession plan, what would happen if the economy suddenly took a turn for the worst in those final months or years before leaving your business? Would you be able to mitigate the harm? How would the business be valued? What kinds of metrics would be used?
A Plan for Your Business Partners
What if you or one of the other business owners had an unforeseen serious illness or injury– or even an unexpected death? How would your desire to leave the business be affected then? Would you still be able to leave or would your departure risk losing everything you worked so hard to build?
A Plan for Your Family
If something happened to you, would your loved ones have the power to manage and control your business? Does your business succession plan consider your family? Would they have the leverage to sell your business at a fair market price or would they be obliged to enter into a fire sale– selling the business for a fraction of what it’s really worth?
Since we never know when “bad things” will happen to us and since effective planning takes a modest amount of time and effort, it’s crucial that you act quickly and diligently after making the decision to transition away from your business.
Finding the Right Business Succession Planner
There is no one-size-fits-all solution when it comes to your business’ succession planning. It’s important to find advisers and professionals who recognize the importance of planning. The professionals you hire should take the time to talk with you about your values, goals, concerns, and all of the other important unique factors pertaining to your business. They should be able to synthesize all of these factors into a plan that works for you and your business.
Don’t wait until it’s too late though. Learn more about business law and business succession planning, and speak with an attorney as early as possible.
