You may think that your business succession plan has nothing to do with estate planning. However, they are two very intertwined processes that both have an impact on the other. Your financial life can be dramatically impacted by how you analyze and implement each of them.
With estate planning, you are preparing for the efficient transfer of assets and property following your death. This will include the successful transfer of power of your business.
You likely grew your business from the ground up, with such a personal connection, it may be difficult to plan a succession. If this is the case with you, then you are not alone. One study has determined that 58 percent of small business owners have yet to create a succession plan. The reasons outlined in the study for procrastinating deal mostly with being too busy with the business to have time for it. Many others believe that it is only something to worry about farther in the future.
Importance of creating a succession plan now
If a scenario arises where you are incapacitated in some way or you meet an untimely death, the running of your business could be extremely difficult for your heirs. Succession planning is much more than just who will run the business and creating new ownership. You will need to plan for taxes, employee training and creating an exit strategy if a successor does not want to take over.
Now is the time
The fact is, there will be a time when you are no longer on earth. There may even be a time you will decide to retire. There is no doubt that discussing a succession plan for your business is not easy and is easy to put off. You should not let confronting your own mortality hold you back from accomplishing a very vital and important business decision. You may be shying away from succession planning because you don’t want certain family members or a trusted employee to find out they are not in your plans. While this certainly may not be easy, you may be surprised that by getting this information out in the open, it may actually be a stress reliever for you.
The best way to control and take care of your life’s work is to get a succession plan in place. You should not leave it to chance on what might happen to your business when you are gone.