Protect your hard work by creating a business succession plan.
You are an entrepreneur.
You created and run your own business.
You are hard-working and forward-thinking.
According to a recent Springfield (MO) Business Journal’s article titled “Starting a business? Plan your exit now,” you need to also be proactive in planning business succession.
How far in advance?
Plan to plan at least five to ten years in advance of your exit.
It will also help you ensure the success of your work now.
What should you do?
Is there an employee, partner or family member who would be qualified and capable of leading the company after you die?
A buy-sell agreement could also be useful.
An experienced attorney can help you create an agreement according to a purchasing price formula.
Fund the buy-sell agreement.
Often this is done using insurance.
How does this work?
You, the owner, have an insurance policy.
You designate the successor of your business as the beneficiary.
The money from this policy will be used by the successor to purchase the business from your surviving spouse.
Your spouse gets money.
Your business lives on.
It is a win-win.
Your family or non-family relationship with the successor will determine how the life insurance ownership, beneficiary, and premium payments are structured.
Again, legal counsel is necessary here.
Train your successor.
Is your chosen successor a family member or employee?
Be sure to train him, as he will benefit from your mentorship and will be more successful.
To help with the transition you may want to have “stay-put” agreements created to keep important employees around through the transition.
Providing bonuses for staying through this transition can be beneficial.
Sometimes circumstances are not ideal.
What are some things you should consider now to avoid problems later?
You should plan for your own injury, illness, or disability.
The business should be able to continue without your immediate involvement.
You should plan for the death or resignation of a key employee.
Good help is hard to find.
You should know how you would replace a key team player and train a replacement.
As noted above, providing incentives to key employees can help them see their value and encourage them to remain at your business.
You should plan for property destruction.
Accidents and natural disasters happen.
You should have insurance to help your business make it through if hit by a catastrophe.
Estate planning is a holistic process.
You should do personal planning to care for your loved ones as well as your business.
This could include wills, trusts, powers or attorney, tax planning, and other issues.
Work with an experienced estate planning attorney to create a plan specific to your needs and goals.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Springfield (MO) Business Journal (October 2, 2017) “Starting a business? Plan your exit now”