As a business owner you face one unavoidable fact; at some point you will leave your business either by choice or force of circumstance. Naturally, you hope to leave your business when you want, to the successors you choose, and with the maximum amount of cash you desire. Unfortunately, most business owners fail to gain full satisfaction when they decide to exit their business.
There is one reason for this: they do not have a Succession Plan. Research shows that 75% of all private business owners do not have a formal succession plan. As a result, they often end up getting too low a price for their business, paying too much in taxes or both.
A succession plan is a comprehensive road map that helps business owners successfully exit a privately held business. A succession plan asks and answers all of the critical questions that you must consider when exiting your company. It covers all the personal, financial, legal, tax and estate planning areas related to your succession. It also helps you consider various succession options, evaluate them and select the option that is right for you.
A well-executed succession plan offers you the following advantages:
- Control of your own destiny – It helps you set goals: to whom you should transfer the business, when you should exit and how to realize the desired value of your business.
- Value maximization – Focusing on the key value drivers of the business and building its value to the desired level, while structuring the business to limit your taxes thus allowing you to keep the maximum amount of dollars.
- Smooth ownership transition for the company’s valued loyal employees, customers, and suppliers.
- Higher likelihood of success – When you set goals and develop a plan to reach these goals, the chance you will succeed is much greater.
- Peace of mind – Knowing that you have taken the necessary steps to ensure that your goals can be fulfilled.
All business owners should have a succession plan. When you get into a business, you should already have an idea what you would like to get out of the business. It is no coincidence that venture capitalists always ask entrepreneurs about their exit strategy before considering an investment. If you want to learn more about succession planning please Contact Us or attend one of our succession planning seminars.
Pillars of a Strong Enduring Structure
- Define Life’s Ultimate Goal
- Establish commitments to accomplish goal
- Document a plan of action
- Engage a plan intermediary for implementation
- Inform trusted advisors of your expectations
- Meet with all professional business advisors
- Formalize each discipline’s contribution
- Review plan objectives with intermediary
- Affect operational changes where necessary
- Measure progress toward goal