The Importance of Business Succession Planning
The importance of business succession planning is vital to a business’s future success. There are five compelling and universal reasons to plan for the succession of your business:
If the business owner does not see the importance of business succession planning at the time of his or her death, the government takes a significant portion of the value of the company, leaving little for the eventual heirs. A succession plan will help reduce, or even avoid, taxes and ensure that the family and important employees get what the owner wants them to have, instead of what is left after taxes.
Risk aversion requires owners to design and implement a business succession plan sooner rather than later. The longer that owners wait to implement a succession plan, the greater the risk that a planned succession will not meet their goals.
Designing and implementing a business succession plan early gives the owner the most options when deciding how to meet their stated succession goals. A large majority of owners want to create a business succession plan to ensure that loved ones are taken care of when it counts the most. The longer that an owner waits to design a business succession plan, the fewer options become available for setting up family members with continued annual income and job opportunities.
A carefully designed business succession plan enables the owner to assert control over the outcome of the succession. The interests of the former owner of the business tend to be disregarded during an unplanned succession involving the government and various attorneys.
An effective method to carry the value of a business during an ownership transition is to implement an established business succession plan. It is said that the business and business owner die on the same day. This can be avoided. While succession planning is difficult for some reasons, such as raising issues of inevitable life changes, mortality, and changes in key relationships, it is important to consider the longevity and transferability of the business to ensure interests pass on as you desire.
For More Information On Business Succession Planning Contact Antonoplos & Associates at 202-803-5676.