Tips for Passing the Torch: Three Goals for Business Succession Planning

 

There are several different things that your company can do to make the process of business succession planning that much easier.shutterstock_4720285

Putting together your plan once is not enough as you must be able to revisit this on a regular basis and make potential changes as you see fit.  It’s much easier to craft a plan and make small changes as you go rather than having the entire company try to adapt in the event of a sudden owner departure.

Having a long term strategy will make transitions easier when a key individual does depart the company. Follow these tips to achieve maximum success with business succession planning.

  1. Track potential successors. Use survey feedback to identify potential leaders who could serve the company in the future. Make sure you identify who has what in the form of critical competencies and attributes and skills.
  2. Communicate with potential candidates. You should never promise them a position necessarily, but you can give them an idea that you are considering them for a future role. This gives them the opportunity to get the most out of training.
  3. Have an emergency plan. This should be a disciplined step by step approach for training successors quickly an immediately in the event that a business owner is no longer able to do this.

Four Critical Tips for Small Business Succession Planning

When you have put a lot of energy, resources and time into building your small business from the ground up, you might like to imagine that you’ll continue running it for the rest of time. Deep down, however, you understand that this is unrealistic. This is why you need to consider business succession planning now.

Whether you intend to pass the business on to a family member or to sell your company, you need a succession plan. This helps to contribute to the long-term business viability. It also increases the chances that you will have sufficient funds in retirement to support you as well as to continue the business that you have fought so hard to build. The longer that you wait to conduct your succession planning the harder it will be to take action. Here are the four most important steps for getting started.shutterstock_164213294

  1. Involve your family. No matter what vision of the future you hold, you need to think about your relatives in terms of succession planning discussions. Are there any individuals already in place who may want to take over when you leave? You should also consider who is qualified to step in.
  2. Create an exit strategy in your business plan. More than likely you already have a business plan for the next couple of years. Your succession strategy and exit strategy should also be included in this plan.
  3. Put together your team of advisors. There will be several different people you need in the process of doing your business succession plan such as an estate planning attorney, a business partner, succession planner, and an accountant. They can help guide you through the complex process of succession planning.
  4. Identify and prepare to train your successor. Once you are seriously contemplating what lies ahead for the future of your company, you will feel more inclined to help choose the right individual to take over after you leave. You need to carefully consider individuals who already have the qualities and begin to put in place a training program to prepare them for the future.

Tips for Small Business Owners Who Have Ignored Their Succession Plans

Many small business owners know the struggle of keeping track of multiple priorities working long hours and taking risks. However, even the most successful small business owners can be tempted to drag their feet when it comes to business succession planning. Some of the most common reasons for this process being skipped over are that succession planning is seen as emotionally difficult, time consuming, complex and expensive. shutterstock_62360050

Without a business succession plan, however, you are facing a lot of risk if you do someday hope to have your company survive you or to sell it for a fair price. There is no cookie cutter process you should approach for business succession planning. The amount of time spent in this process depends on the size of the business and the particular issues involved such as whether or not family members will be taking it on. Do not wait too long to get started, however, because this could prove problematic if something happens to you and you need to exit the business suddenly, having a business succession plan in place can help to avoid the challenges with a sudden departure.

Business Succession Planning: What Are the Values at Work?

A business reflects its owner, and a clear plan can keep that concern on the path that was chosen. Lack of a succession plan could morph the business into something different or leave it in the hands of someone who would not reflect the founder’s intent or attitude. shutterstock_110061932

The type of plan used will depend on whether the business is to be sold or kept until death or retirement. If the business to kept and passed along, use of an outside consultant can eliminate bias in the selection of a successor and that successor could be placed in a similar business to prepare for the future.

If the business is to be sold, there are many options; an outright sale, a buy-sell arrangement for a future date, a family limited partnership, or an annuity arrangement trading your business for a guaranteed lifetime income string.

What is the CEO Succession Crisis?

It’s been said that the CEO succession process is broken in America. Although many situations call for a new generation of leaders to take the reins of a business, surprisingly few businesses have taken advantage of planning opportunities to do this.shutterstock_229999303

According to research from Harvard Business Review, half of companies with more than $500 million have no clear CEO succession plan. And those that do have plans are unhappy with them. The Corporate Leadership Council asked nearly 300 large company HR reps to rate their happiness with a succession plan, and only one in every five was pleased.

Simply put, a CEO who has been in place for several years with no clear succession plan is a recipe for disaster. The future of the company is at stake when this happens, exposing everyone to potential risks. Do you have a plan in place for your business? If not, contact a business succession planning attorney today.

Business Succession: Tying a Plan to Your Vision

Setting a course for the future of your business involves looking well into the future. Difficulties can often act to narrow and constrict your long-term plans, and focus can easily turn to quarterly results and reactions if you are not careful. shutterstock_254049055

When thinking about the future of your business, you need to take time to zoom out from this smaller picture into the bigger one so that focus is once again concentrated on how to grow as well as the people to help accomplish these goals. A wide focus helps receive buy-in from the staff of your organization in understanding that personal decisions will influence outcomes.

Some key questions to consider during this process involve which people may be intending to retire in the next five years, what people are already in the pipeline for future development, and whether promotions would generate position gaps within your company. Putting together a business succession plan should only be done under the experience of an estate planning attorney.

Ready to plan ahead? Contact us for more information.

What to Do When You Need to Exit Your Small Business Quickly

Certainly, planning ahead for a small business exit is a wise decision, but it’s not always an option. Sometimes, business owners need a quick exit for one reason or another, and putting forth a quick plan of action can be crucial to following through properly. 5HeZmh6ZnnsYGxPbT0bM2RzZFsLirU3oUPu_Hs2PNxM

New research from BizBuySell.com reveals that the time to sell a business decreased by 23 percent recently, from 200 days to only 153 during the final quarter of 2014. Five months, though, may be too long for some business owners who need immediate action.

In case this describes your situation, here are five steps you can take for immediate action to sell your business, according to inc.com:

  1. Contact potential buyers. As a business owner, you might already know interested parties.
  2. Incorporate a business partner. A business partner could help manage portions of the business you’re not interested in, giving you more time to find the ideal buyer.
  3. Pass on the business to employees. Creating an Employee Stock Ownership Plan gives you more opportunities and helps you move forward a sale more quickly.
  4. Provide incentives. The more attractive you can make the sale opportunity, the more likely you are to sell it quickly.
  5. Liquidate assets. While this is certainly not going to be your first option, it is a potential one if you find you need to exit quickly without taking a huge financial hit.

Need help planning ahead or in crunch time with a business sale? Contact our offices today for a consultation.

Why You Need a Business Succession Plan

It’s so common for small business owners to love their work so much that they it might not even be on their radar to think about retirement. As a recent inc.com article points out, though, you might be tempted with an offer you can’t refuse at any point in your business. Are you prepared if someone offered you a buyout? shutterstock_129614795

 

Even if retirement is not on your radar right now, you should always be thinking about the long term. Since it could take several years to put a succession plan in place, here are five key steps to take to ensure you’ve thought about all the details big and small.

 

#1: Start Training a New Team or Manager

It’s never too soon to start the process of tapping the next round of talent.

 

#2: Document Your Plan

Contact your business succession planning expert to make this happen

 

#3: Consider Your Backup Plan

Simply put, things don’t always unfold the way that you expected. Make sure you’ve got a Plan B in place just in case.

 

#4: Hire the Right Accountant and Legal Team

Since your plan might evolve over time, make sure you’ve got a plan in place to get the right advice when you need it. Schedule regular checkins.

 

#5: Think About Your Own Exit

You’ve got to think ahead about the exit as well- so don’t focus on just team member actions. Consider how your life will change once you exit the business, and prepare yourself for the transition.

Thinking about business succession now? Contact us at (601) 925-9797.

Structuring Your Business Succession Plan With Taxes In Mind

If you feel overwhelmed or confused by the process of business succession planning, you’re not alone. In fact, this is a common challenge facing many of America’s business owners. To further complicate matters, many business owners are not informed about the possible tax implications of a succession plan they choose. This is why it’s so important to choose a business succession advisor who is familiar with the implications for both your business and your tax situation. shutterstock_183711386

One common mistake made in the process of business succession planning is to sell all or a portion of the stock to your children. This can have negative tax consequences that you didn’t realize when you put the plan into place. For example, if you use a stock purchase agreement or a stock redemption agreement that required insurance on the owner’s life in order to provide company stock to someone else, the IRS could collect estate taxes on that amount. While it insurance can be an important part of your overall estate planning, it might not be the most appropriate vehicle to pass on company stock to your children. A trust or other business succession planning strategy may be more aligned with your business needs while also taking into account the tax implications of such an action.

The bottom line is that you need a business succession planning advisor who is familiar with creating a comprehensive strategy aligned to your needs. Contact us today to learn more at (601) 925-9797.

Who Really Needs a Business Lawyer in Clinton?

To the average person, the term “business lawyer” or “corporate lawyer” may sound like something that only exists on Wall Street.  In reality, though, nearly every business in Clinton can and should use the services of a good business lawyer.  This means large and small businesses alike.

Business lawyers play a very different role than that of trial lawyers.  Rather than fighting one another, “opposing” attorneys are generally working together to bring about legal transactions between businesses.  It’s also very common for a business or corporate lawyer to help a business set up and review its contracts, to advise on tax issues and to help with the legal setup of the company.

A typical Clinton business lawyer may have expertise in one or more of the following areas:

  • Accounting
  • Bankruptcy
  • Contract Law
  • Intellectual Property
  • Licensing
  • Securities Law
  • Tax Law
  • Zoning

Each industry will have its own specific issues and concerns, too, so it’s possible for a business lawyer to focus his or her practice on a particular type of business.  In fact, some larger companies have their own corporate lawyers right on staff.

Business Planning

A business lawyer in Hinds County can have a really important impact on an individual business.  Not only can they protect it by making sure everything is up-to-par when it comes to setting up and running your business, but they can also help you plan for the future.  For example, is there a succession plan in place for when key personnel leave the organization, either expectedly or unexpectedly?  The ability for a business to survive in this circumstance can balance on how prepared it was for this kind of transition.

A related concern is what will become of the business should the owner (or one of the owners) die?  Who has rights to his or her shares, and how should that be handled?  Will the business be taken over by a family member, or will it be sold, shut down, or something else?  The business lawyer helps to lay out all the options and make determinations about the decisions that need to be made.

It’s also worth noting that many business lawyers in Hinds County have a wide skill set.  For example, in addition to business planning services, they may also provide personal estate planning for wills and trusts, assist with real estate transactions, and assist with divorces or prenuptial agreements.

Getting Help

Whether your business is large or small, a business lawyer in Clinton will help ensure you are set up on a proper foundation and that you are well prepared should you face lawsuits, creditors or unexpected transitions in the future.  To schedule an appointment with our business and estate planning attorneys, simply call (601) 925-9797.