Representing Business Owners Throughout Dallas-Fort Worth
If you are a small business owner, you know in your heart of hearts that there is nobody in the world who could run your business as well or better than you do. And yet, if you are not preparing to pass your business on to someone else, you are not serving your customers or clients as well as you could be. It’s a dilemma so frustrating that many business owners choose to ignore it in hopes that it will somehow go away or a solution will fall magically into place. However, there is no substitute for proper business succession planning.
What is business succession planning?
A succession plan is a strategy that allows a business to be passed from one owner to another. It can take many shapes. Some businesses are passed onto the next generation, others are sold to competitors. Still, others are bought by employees. Each path presents different challenges, and offers unique opportunities from the risk management and estate planning perspectives.
Good business succession planning will actually be dual plans that specify what will happen if everything goes as anticipated when the current owner retires or sells out, and a backup plan that can be implemented quickly in case of an emergency. The best plans will integrate seamlessly with a business owner’s estate plan so neither the business nor the family suffers undue hardships so matter which plan is implemented.
Crafting an emergency plan
An emergency plan should be developed first in case the current owner is suddenly incapacitated or passes away. At its core, it needs to identify who will take over the day to day business operations, but it should also specify what resources are available and what actions can be taken to carry the business through any related fiscal problems. Often, this is done by securing a line of credit and insurance policies, something our firm can assist with.
The emergency plan should also touch on what sort of message can be conveyed to customers, employees, and lenders to reassure them that things are under control despite the sudden change in leadership. In order for this message to be accurate, there obviously needs to be a good plan in place that all the relevant parties buy into. A good message alone will not keep the company afloat.
Focusing on the emergency plan first forces business owners to really think about who could step up and actually make a go at running their businesses. Often, they are surprised to realize that the person they are counting on to take over in the long-run is ill-equipped for the task. This is where the business succession planning rubber hits the road. Our firm can draft whatever documents are needed to legally transfer a business from one person to the next, but it is the business owner’s responsibility to make realistic plans and to lay the groundwork so that those plans can be successfully implemented.
Business succession planning: Implementing a long-range plan is ideal
Using insights gleaned during the emergency plan planning process to inform the long-range planning process helps business owners put together a realistic plan. Sometimes the emergency plan planning process so alters the business owner’s perspective on who should take over the business that the long-range plan becomes a slow-motion version of the emergency plan.
Whatever the business owner’s long-range plan includes, the first stage must involve communicating the plan to key stakeholders. The kids should know they should be preparing to take over the family business if that’s the plan. If it would be better for an employee to buy the business out over time, the employees should know this is the plan so they buy into it and are incentivized to work hard to make the company grow. If the business will be sold off to the highest bidder, employees should know that too. They may not like the idea, but knowing will help them feel more secure in their future even if that future is uncertain.
We help business owners think through all of this and put into place the legal documents and processes that will make a plan into a reality.
Weaving together the succession plan and the estate plan
Many of our business succession planning clients are also our estate planning clients. When a business us closely held, or is the main asset someone is relying on to fund their retirement and their end of life care expenses, one must carefully weave the succession plan and estate plan together.
We, of course, focus on the legal side of things, but we are happy to work with financial planners, business advisors, insurance brokers, and accountants to ensure that the succession plan will not delay retirement and that retirement will not tank the business. We also help business owners put into place the legal documents necessary to transfer decision rights should the business owner become incapacitated.
Comprehensive and confidential
Working with a business owner to craft both their succession plan and their estate plan means we know basically everything about our client’s life. Including their hopes and dreams and future goals. This sort of intimate relationship is not typically of business relations, and it makes some of our clients uncomfortable at first.
It is therefore important to us to note that we treat all of our clients with the utmost respect and would never do anything to betray the trust that has been placed in us. We are discreet, professional, and unwaveringly loyal. A secret shared with us, be it personal or business-related, is one we keep.
Dallas-Fort Worth Succession Planning Attorneys
The Law Office of Carey Thompson, PC has a well-earned reputation in the business community for integrity, fairness, and diligence and putting the best interests of our clients first. We know that you want to focus on running your business, not filling out paperwork or managing legal risks, so we make things as efficient and economical as possible on our end. If you need assistance crafting or implementing a succession plan or incorporating a succession plan into your estate plan, contact our office today for a free consultation.