A good business should have a vision, and a succession strategy should be considered when the time is right to sustain the owner’s legacy. There are several aspects that have an effect on the overall performance of the succession plan and its execution, but below are four realistic tips to remember when preparing the succession of your business.
1. Define the Succession Plan’s Goals
As a business owner, what is the most important thing to you in the succession planning process? Is it financial stability for your family or continuing employment for productive team members? What about maintaining local ownership versus integrating with a larger company? After setting the targets, the CPA will assist in setting up a succession plan that can make your goals easier to achieve.
2. Ensure a Willing Seller/Willing Buyer Scenario
Many business owners expect that children or other family members may choose to inherit their business. They also dream that a bigger corporation would want to purchase the whole enterprise. All of these situations are based on assumptions. Thus, start by holding realistic negotiations with everyone you’d like to be involved in the future of your business. After these discussions, it is much easier to plan a transition that encourages an honest appraisal of potential choices and requisite planning.
3. Plan Efficient Financial and Tax Terms
After investing a lot in a profitable business, most business owners are terrified at the idea of selling away their business. But there are a lot of tax benefits for gifts. Accountants and business consultants of CRI are able to assist you in the definition of the right tax maximization techniques for your succession plan—as well as in the supervision of the financial transaction necessary for the succession of your business.
4. Review and Update The Succession Plan
Changes will take place, thus you should revise your succession plans accordingly. Please review it periodically, or at least semi-annually. This is to reflect improvements in your personal life, business model, staff, competitors, and economic factors. Just be sure that if the client base shifts, the succession plan protects consumer and distributor communications in the event of a drastic transition.
Succession planning is critical to any business’ long-term success. Realism and preparation are two keys to the success of a succession plan. For more details, visit our related succession planning video blog. Remember that planning now has the potential to pay off exponentially later. Therefore, contact the CPAs of CRI with any questions.