Is your business prepared in the case of a major life change to one of the owners or primary shareholders? There are many things that can happen that can lead to disaster if a plan is not already in place, such as an owner becoming disabled or passing away, a divorce that causes shares to be split, a major shareholder deciding to pursue a new opportunity, or disputes among heirs of a deceased shareholder. To avoid significant business disruptions, it’s essential to have a succession plan. Here we’ll explore how being prepared for life changes can safeguard your business.
Protects Your Loved Ones
Significant life changes can happen to you or a business partner at any time and at any age. No matter how much you plan, it’s hard to know what might happen in the future. Having a succession plan in place will help protect you and your loved ones in case you are unable to control or tend to your business. With this in place, you won’t have to worry who will take over your business since it will be fully detailed in your plan.
With a succession plan in place, big setbacks can be avoided or mitigated, and your business can continue to operate smoothly if you or a main shareholder exits suddenly. For instance, the passwords, IT information, data, and client lists, and financial records will fall into the right hands to prevent business disruptions. Your plan will also include the development and training of a new owner or key shareholder, and help to transition them into the role.
Ensures the Right People Inherit Your Business
Your business is your life’s work — you want to ensure that it gets passed on to the right people. Working to develop a thorough succession plan ensures that your business falls into the right hands and addresses any inheritance issues that could arise.
Minimizes Tax Implications
Succession planning can also help you to avoid tax issues down the road. An estate plan can help you to avoid substantial tax implications and any potential probate delays when transferring the ownership of your business in the future.
Establishes an Exit Strategy
Every business owner should have an exit strategy in place. A business success plan helps you to create an exit strategy that is on your terms.
If you own a business, it’s important to be prepared for life changes to safeguard your business. A well planned out estate and succession plan will help you make fundamental decisions about identifying and developing new leaders, maximizing company value, tax strategy, and ensuring that the business, the clients, and your family are protected.