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A Successful Business Is Something To Be Proud Of

You’ve worked hard, weathered the storms, and proved yourself to be valuable and trustworthy to your customers. All the time and energy you’ve spent creating something wonderful have put you in a position to take care of yourself and your family.

Now that you have this successful venture to your name, do you know what would happen to your business if something were to happen to you? This is where business succession comes into play. If you have a business you hope will continue on after your death, you need to make sure you have a plan in place.

Will Your Business Survive?

It is estimated that upwards of 25% of people involved in a family business are entering their senior years without any specific succession set up for their business. What many business owners fail to realize is that a simple will is not going to be sufficient in dictating what should happen to their business in the event of their death.

In its simplest form, a business succession will detail out all of your wishes for your business partners and heirs to follow should you no longer be able to continue with the business. In this succession plan you should include, at minimum, the following:

  • A valuation of your business (which should be updated any time there is a major change)
  • A distribution plan for stock and other assets, if necessary
  • Debt paydown schedules
  • Information about relevant life insurance policies
  • Agreements between partners and their heirs
  • Business successor responsibilities
  • Any other relevant information regarding business operations or assets

Business Succession: Where To Start

The final goal of a business succession plan is to have clearly established and documented objectives for your business’s future. You also want to make sure that you provide your successors with a detailed picture of the company’s resources – both financial and human.

When establishing these objectives here are a few questions you can ask yourself to get started:

  • How much control do you currently have over the business, and how much of that would you like to retain into the future?
  • Who do you feel would be the most capable of taking over the reins after you step down or are no longer able to run the business?
  • Which of your employees are vital to the company’s success and should be retained?
  • Does the business have sufficient assets to cover the business’s liabilities as well as any applicable estate tax?
  • How much money does the company need to remain operational?

It is important to keep in mind, however, that while creating your goals and objective is crucial to your business’s succession, it is not everything. You need to make sure that the other key stakeholders are on board and that your plan is documented in a way that will ensure it is followed.

We can help. Working alongside an experienced business succession lawyer will help make sure that there are no gaps in your plan or loopholes that could be exploited. At Stafford Law Firm, we are here to make sure your legacy lives on and your beloved business is in good hands for generations to come.

Frequently Asked Questions

Writing a business succession plan is a complicated process and one that should not necessarily be done alone. You will want to make sure that your business succession plan includes details on the current state of the business as well as your wishes for how it should continue to operate if you were to step down or were no longer able to manage the operations.

Businesses need to undergo succession planning in order to prepare themselves for a situation where one of the owners needs to step down or passes away. Without a clearly documented plan, figuring out a company’s succession could cause severe tension and in-fighting.

The owners of a business need to hold themselves accountable for creating a detailed succession plan for what would happen if one of them were to pass away or needed to step down for any reason.

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