Five Considerations for Business Succession Planning
It’s a wonderful feeling to realize that your business will live on past you. However, you may feel overwhelmed when you think about the planning to transition your business.
The goal of business succession planning is for your business to carry on seamlessly when you choose to retire or die. Read on to discover five of our tips for successful business succession planning.
1. Choose the right successor. When you’ve built your business from the ground up, it’s hard to picture anyone but yourself running it. But if your business is going to continue running long into the future, someone will need to operate the business. If you have partners, one of them may be an appropriate successor. You may also choose to pass your business on to an adult child, or to someone you have been mentoring.
2. No suitable options? That’s okay. If you don’t think anyone in the business is the right person to succeed you, another option may be to sell your business. If you have business partners, they are natural candidates to purchase the business. If you are the sole owner, there are professionals who can assist in identifying candidates for transitioning your business.
3. Get your business appraised. As part of any transition, it is usually a good idea to get your business valued or appraised. This helps you understand the value of your business, and can help structure a transition to minimize taxes. A CPA can help you set a value on your business.
4. Consider transferring via life insurance. Life insurance is often used to fund purchases between business partners. In those plans, the owners take out life insurance policies on one another so that if one of them passes away unexpectedly, the survivors can use the death benefits to buy out his or her share of the business; providing needed cash for the family of the deceased partner.
5. Consult a trusted attorney. Business succession planning is not something you should attempt to navigate without an experienced guide. We can help. We understand the importance of having a strong plan that helps you avoid legal disputes and makes transitioning your business as smooth as it can be.
If you are ready to get started on your business succession plan, contact Grabitske Law Firm, PLC. We can help you with sound guidance and advice to transition your business. You can reach us at (507) 779-7012.