Success planning is important for those who own businesses and planning for the future is something that should not be overlooked. This is true whether the company is large or small. However, in the world of business, future planning involves much more than just being able to fall back on a 401K fund. If you are like most business owners, you want assurance that in the event of your untimely death or after your retirement, your business will still have a bright future because you have created a solid plan for its success.
Depending on the type of business you own, you may be planning to turn it over to your children at some future point in time. You may also have plans to allow your business partners to run the company. However, despite your best laid plans, unexpected changes sometimes take place. For example, your children may decide to go into a different line of work and business partnerships may have to be dissolved for one reason or another. Therefore, through succession planning you can create a Plan B on which to rely. Succession planning addresses a variety of issues, such as how partners’ shares are distributed once they leave the company and making provisions for new partners, such as retirement funds. When planning the future of your business, thought must be given to these and other issues.
While it is true that most succession planning is focused on addressing issues that are not likely to happen in the immediate future, everyone must face the fact that unexpected events often occur. Therefore, it is wise to make provisions in advance. The process is very stressful if you procrastinate because without such a plan, you will end up making decisions during times of crisis, which can lead to unsatisfactory outcomes. Some questions you must ask yourself when designing the succession plan is whether or not you want your business to continue after you are no longer involved or if it should be dismantled or sold. You must also determine whether or not you want the business to stay in the family. Regardless of the perfect scenario you picture for your future, it is always wise to consider an alternate plan that you can use as a last resort, such as the sale of your business, if none of the other options you desire are possible.
Succession planning is about both the legacy of your family and the legacy of your business. Appropriate planning will guarantee that your funds grow sufficiently to support future generations. A proper plan is one that is comprehensive and covers everything from charitable planning to family trusts and education trusts. It is a mistake to think that such plans only affect your business. This is not true. Your business interests are tied to your personal life, and ensuring that your estate is in good hands is vital to your legacy. You must also consider aspects such as taxes, funeral costs, insurance and other imperative factors when creating a plan.
It is never wise to gamble on the future of your family and your business by failing to acknowledge that succession planning is a vital step in the process. If you are a savvy business person, you should not procrastinate. Instead, make an appointment with your accountant to discover how to plan for the future of your estate and business. You can then enjoy peace of mind that comes from knowing your best interests are protected.