What business owners should know about succession planning

| Feb 25, 2021 | Business Law, Estate Planning |

You had a dream 15 years ago to launch your own IT consulting business and see it grow. Now, you’ve achieved that goal and are nearing retirement. You’re beginning to think about what will happen to your business in the future. Should you step down from your business and have a key employee or family member take it over?

Why business succession planning matters

Many business owners fail to develop business succession plans. However, having a business succession plan can help keep your business operating smoothly in case you pass away suddenly or become incapacitated. Your business succession plan will include:

  • Whom you have picked as a business successor
  • When or under what circumstances your business succession plan will happen
  • How your business succession will be funded (using life insurance to cover a business succession is common for those in business partnerships)
  • Your business’ standard operating procedures, employee handbook and other information
  • An estimated value for your business

Without a business succession plan, your business can flounder if you die suddenly or if you become incapacitated. Your family could fight over who should take over the business and how much it is worth. Those running your business may have a cash flow problem if you didn’t have an insurance policy to cover your business succession. Your business could be sold for less than its worth.

Getting help with business succession planning

You should consult an experienced attorney to help you make a business succession plan. An attorney can guide you to ensure you have made a solid plan and protected your business’ future.

You don’t want your business to suffer if you pass away suddenly or become incapacitated in an accident or because of an illness. With a business succession plan in place, you can make sure your business will thrive for years to come.