Business Succession Planning - The Key to Profitably and Confidently Passing Off the Baton Part 2Business Succession Planning The Key to Profitably and Confidently Passing Off the Baton Part 2 In our last Newsletter, we presented the first of a three part series of articles discussing Business Succession Planning. This is the second part of that series.
Inevitably, every business owner
Step #1: Set financial goals. The first step in creating a viable business exit plan and strategy is to determine your long term income needs and retirement goals. From this, you can determine how much money the sale of the business must generate for you to retire comfortably.
Step #2: Determine the current value of your business. Once you set out your long-term financial goals, the next step in your exit plan is to determine the current fair market value of your business. You do this by analyzing the company’s books and comparing it’s profits and losses with similar businesses in the area. The current value
Step #3: Build business value. If the value of your business is what you expected, then your exit
Step #4: Sell the business. Once you determine your time frame for leaving the business, you should examine the pros and cons of selling the business to an outside third party or to insiders, such as family members or key employees. The type of purchaser
Step #5: Create a contingency plan. Even when you have a comprehensive exit plan in place, things can go wrong. You could become physically or mentally disabled, a key employee could leave or die, or a fire or hurricane could destroy your business. You should build your business exit plan around these and other unexpected situations. As part of a contingency plan, you should include a buy-sell agreement, employee incentive programs, and purchasing business, disability and life insurance.
Step #6: Plan for your passing. Once you have both a comprehensive business exit plan and a contingency strategy in place, you can focus on your overall estate planning goals. Much of the estate plan may be tied directly to the sale of the business if it is to be sold to one or more family members. This, in turn,
Your business succession plan should be a key part of your asset protection planning, estate planning and retirement planning.
Creating your business succession plan right now could provide you with retirement income, lower income and estate taxes – even the opportunity to donate money to a charity. And all this could be yours regardless of whether you transfer your business to family members, employees, or a third-party buyer.
In our next Newsletter, we
You’re Invited to Call or E-mail.
“If you have questions about owning and operating a business, please send your e-mail to [email protected] or call me at 618.639.0461. I’ll be happy to help you in every way.” -- Jeff
Jeffrey D. Roberts Attorney at Law w CPA w Entrepreneur
Comments
|