Owning a business is hard work. Whether you have started your business from scratch or purchased it, business ownership is a challenging and rewarding experience. When you put so much time, energy, and money into making sure you operate a successful business, it is important to make sure you put mechanisms in place to protect that business should you pass away. A recent article from Forbes reports that around 60 percent of small business owners across the country do not have a business succession plan in place. That means nearly three out of every five small business owners is vulnerable in the event of an unexpected death. However, there are some steps you can take to ensure the viability of your business and developing a comprehensive estate plan that includes a business succession plan working an experienced estate planning attorney can be helpful.
Basics of a Succession Plan
A business succession plan is a plan of action to transfer ownership and management responsibilities within a business. They are particularly important for small business owners that own their business outright as sudden events such as death or incapacitation can have a significant impact on your business.
These plans can help you maintain a constant influx of cash to your business that might otherwise be interrupted. This means bills will continue to get paid, clients’ needs will still be addressed, employees will still be paid, and your business will still continue to function. Without such a plan in place, the results can be devastating in a number of different ways. Employees will face concerns over job security, creditors may begin to apply fees to missed payments, and ultimately the business could be forced to close. A little planning ahead of time can avoid these negative consequences.
There are a number of approaches to business succession planning. You may wish to name a child or other person you trust to continue running the business. If you are a co-owner, you may want to prearrange for the sale or disposition of your business interest in accordance with the laws. Whatever approach you determine is right for you, it is important to address business succession planning as early as possible to make sure all of your bases are covered. It is also important for you to discuss your plans with family members and other stakeholders to properly gauge the role they will play in your business succession plan.
Protect Your Business Today
There are a number of reason people do not have business succession plans in place. Many people think they will not need one. Others want to put it off until a later time when they are older and more likely to need such a plan. Some people just forget. Whatever your reason, working with an experienced estate planning attorney can help you understand the steps you can take to protect your business. It can be tempting to put off business succession planning, but doing so can have swift and severe consequences on a business that you have worked hard to build.