Do you lack a succession plan for your small business? Don’t worry. You have company. A small-business survey from Nationwide found that half of respondents said they don’t have a succession plan. Among those without a plan, 47 percent said they didn’t think such a plan was necessary. An additional 22 percent said they didn’t have time or know how to proceed, while 11 percent said they didn’t have time.1
If you’re not nearing retirement, a succession plan may not seem like an urgent priority. However, a sound succession plan can be an important tool for any business owner, no matter your age. Your succession plan can help you make strategic long-term decisions so you can capture maximum value when it finally is time to exit your business. It can also protect your business and your family in the event of an emergency.
Not sure how to begin your succession planning? Below are a few tips to get you started. You’ve worked too hard to build your business to not fully benefit from its value when it comes time to exit.
Do you plan on leaving an inheritance to your children, grandchildren and other loved ones? If you’re like many retirees, you’ve worked hard to build a career, accumulate assets and raise a family. While it may not be enjoyable to think about your death, an estate can help you pass your legacy on to your family members after you die.
Of course, there’s nothing saying you have to wait until your death to distribute your legacy. It may be just as effective for you to give assets away to your family members while you’re still alive. That way, you can see your loved ones put your legacy to use.
Every business owner has to make an exit at some point. Some owners leave on their own terms, either through retirement or with the sale of the company. Others, though, exit before they’re ready via disability, health issues or even death. While it may not be pleasant to think about the latter category of exits, it’s important to consider what may happen to your business and your family if you pass away.
Estate planning can sometimes be a complicated process, but it can be even more complex if you are a business owner. You have to consider how to compensate your family for your years of investment and hard work. You also may have business partners to think about. And you probably want to create a smooth transition for your employees, customers and other interested parties.