Brittney Castro, CFP® at Perennial Financial Services (http://perennialfinancialservices.com/), explains how and why small businesses should develop a succession plan. A business owner can follow these steps to ensure that his or her business will fall into the right hands.
- Establish a plan from the start
- Create an exit strategy in the event of disability, retirement or death
- Execute plan with appropriate legal & estate documents
Business succession planning is really important and actually, most businesses think that they only need to look at this when they're ready to retire or they've been in business for a long time. But actually, you need to look at it even in the beginning. Because usually your business is one of your biggest assets that you're going to own, so you really want to just to find the long term goals for that business. And to plan an exit strategy in the event of the disability, when you want to retire and even at your own death. So, you know, some business owners would like their business to pass to their children and they run it for another 50 years. Others really just want to sell it in 5 years for profit or sell it at retirement for a profit.
And some business owners choose to have their business pay them an income for a long time, even if they're not necessarily working full time anymore. So whatever your plan is or your long-term goal and wish for the business, start to think about it now because that will help you execute the proper business succession plan and get the right legal documents and state documents in place.
Business succession planning is also very complex so consult with your team of professionals, CPA, financial planner, attorneys to make sure that everybody is working together to carry out what wish you have for your business.