Do You Have a Business Succession Plan?

Issue: 
March-April 2008

MANY SMALL BUSINESS OWNERS don’t have a business succession plan in place leaving them unprepared for retirement, disability or death. A business succession plan determines how your business will be transferred to others and outlines the steps necessary to prepare for the transition. A good succession plan ensures that your wishes will be carried out if you should die suddenly or can no longer run your business. It can also help you ease into retirement or provide a retirement income.

Should you have a business succession plan? If you own a business, the answer is yes. When you’re building and running a business, thoughts of selling it or passing it on to others are often far from your mind. However, that day will eventually arrive, and as in all business matters, the earlier you plan, the more successful the transfer will be. Business succession planning is really an extension of your personal estate planning but with a focus on the future operations of your business.

Thinking about succession planning requires asking some tough questions:

• When you die, how will you fairly and equally divide your estate amongst your family?
• Who will take over control of your business?
• What other assets do you have and who will receive them?
• How much control over the business do you want to retain when you retire?
• When will you release control completely?
• Where will the money come from to fund the purchase of your business and fund your retirement?
• How will your family retain their standard of living when you die?
• How will you ensure your business continues to run smoothly?
Every business and personal planning situation is different. Every succession plan is also different. Taking the time to think through these six key steps will help you start your business succession plan.
1. Assess your current situation
2. Understand your goals for your business and your family
3. Identify and prioritize action plans
4. Select the best action plan
5. Document your decisions
6. Implement your plan

If you would like a more detailed checklist to help you identify your needs, please contact Kell Sewell.

Kelland.sewell@freedom55financial.com, 705-761-1395

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