For many small business owners, their business is their largest asset. Therefore, they need a business succession plan to control what will happen to their business when they can’t run it.
What, Me Worry? Approach
One planning option, which has been embraced by many, is to do nothing other than to decide to do that later. With apologies to Alfred E. Neuman, the foregoing planning technique might be called the What, me worry? approach to business succession planning. Few family business owners want to think about succession planning because they don’t want to plan for health issues or premature death. They incorrectly assume that the family business will continue without interruption and the financial health and growth of the business will continue regardless of what happens to a key member of the family business. Business succession planning addresses who will replace key persons in the business and creates an action plan for the next generation for keeping or selling the business.
Business Succession Planning Checklist
Having a business succession plan can be a blessing for your family members so they don’t have to worry about what to do if you can’t run the business anymore. The business succession planning checklist below should get you started:
- Start with the end in mind. What do you want to achieve? Don’t worry about legalities, time, etc. Right now just focus on what you want the end to look like.
- Next, write out what you believe it will take to transfer control of the family business to the next generation or to sell the business. Don’t concern yourselves about how this will be achieved at this stage. Don’t let the emotions of the family dynamics can slow progress. If that happens, the business owners delay meaningful planning and taking action so the family business can continue to thrive or can be ready to be sold.
- Select your successor. Do you want to sell the business or transfer it to the next generation? Consider who will buy the business? Do all of your children want to be involved or only some of them?
- Think about a sale price or a formula for determining a sale price. Do you want cash or will you take installment payments? Will you gift it to your children?
This article is for information only and is not intended to provide legal advice. While this article should motivate you to begin thinking about a business succession plan for the future of your business, it is not intended as a comprehensive checklist for business succession planning. Call us at 813-852-8500 to schedule a complimentary consultation with a business law attorney to get started today.