You have worked tirelessly for many years, made sacrifices, and built a successful business. You do not want your company to die a quick or slow death one day when you step away from the game. You want to leave something of value for your children and grandchildren.
This blog will offer some pointers on business succession planning: protecting your business for future generations. You can work with a Texas small business attorney on your business succession plan.
The Downside of Not Doing Business Succession Planning
Many people do not prepare a business succession plan for the same reason that they put off preparing a will or living trust. They do not want to think about retiring or dying. While understandable, you will not be at the helm of your company forever. Just as a ship without a captain will eventually crash, sink, or run aground, you need to make sure there will be competent leadership for your company when you step away.
Done properly, a sound business succession plan can set things in place for an orderly and financially secure retirement. The plan can also reduce taxes and help the company grow.
Issues to Consider in Formulating Your Business Success Plan
A business succession plan involves far more than merely naming your successor. Here are some of the topics you might wish to consider when creating your business succession plan:
- Your personal goals. Do you want to retire early or work until they have to carry you out of your office?
- Your business goals, whether you want to grow your company into the stratosphere or maintain its current size.
- Talk with your lawyer about how your company’s current business structure impacts its future options, taxes, liability, and ability to raise capital.
- Your attorney can talk to you about how your plan could minimize estate and gift taxes. You might want to purchase life insurance to meet the needs of your family. You might want to structure your investments to manage your financial risks during your lifetime and for the future to provide for your family.
- Evaluate potential candidates for future leadership of the company. Your options include keeping the business in the family, promoting an existing manager or officer, hiring an outside individual to lead the company, or leaving the business to your employees. Before you assume that any particular person will take over the reins from you, find out if that individual wants to be in that role. You will want to have several candidates.
Many family businesses fail after the first generation, in part because of the lack of an orderly transition of leadership. Your children might assume that they will get the company automatically, but not have the business skills to keep it viable. Make sure that the next leaders of your company have or get the skills and knowledge to do the job well. We realize that your expertise lies in the area of your industry. When you work with a Texas estate planning attorney on your business succession plan, you can get back to running your business and let the lawyer draft the necessary documents to craft and implement your plan. For help with your case reach out to our office today.