How do you plan for your future? In the business world this doesn’t simply mean having a strong 401K to fall back on, no, it’s much more complicated than that. For business owners, who own companies of any size, succession planning is an important piece of the puzzle. Planning for the day when you are ready to retire, or in the event of your untimely death, you want to be secure in the knowledge that there is a solid plan for the future of your business.
Depending on the business you run, you might plan to hand the reigns off to your child one day, or one of your business partners, but things change, and they can change quickly. You could lose partners, or your child may decide to forge their own path, then what? Succession planning is all about having a Plan B to rely on, so it’s important that you plan for all scenarios. Succession planning also addresses the issue of retirement amongst partnerships, such as what happens to a partners shares in the business once they leave, and whether provisions for a new partner need to be made. These questions and others can be addressed during the planning of your business’s future.
For most succession planning addresses issues that are far down the road, but the truth is we never know when our time is up. This is one reason why these provisions should be made as soon as possible. For those without a succession plan, they often begin making plans once they discover their health is in jeopardy, which can make the process very stressful. Either way, be sure to consider all your options. Do you want your business to continue? Should it be sold or dismantled? Is it imperative it stays within the family? Despite what your ideal situation for the future is, you can always include an avenue, like the sale of the business, as a last resort caveat when none of the other circumstances exist or can be met.
Succession planning is as much about the legacy of your business, as it is about the legacy of your family. Proper planning can ensure your wealth grows and is sufficient to support your family for generations to come. From education trusts to family trusts and charitable planning, a good plan can absolutely cover all your bases. Don’t think about this type of plan as something that only affects your business. Your estate is tied into your personal life as well, and ensuring that estate is well in hand is critical. Planning for things such as insurance, funeral costs, taxes and everything else in between can be achieved through the combined planning of both your estate and your succession, which should go hand-in-hand.
Don’t roll the dice on the future of your business or your family by denying the necessity of succession planning. As a smart business person, it’s in your best interest to discuss this with your accountants and find out how you can best meet the needs of your business.