Whether your business is a family tradition or an endeavor of partners, you likely want it protected and profitable for generations to come. With that end in mind, a sound succession plan is a must for businesses in any stage of development.
It is estimated that over the next 10 to 15 years, over 8 million businesses will transfer ownership. The estimated combined value of these businesses is over 10 trillion dollars! Clearly, if you are a baby boomer business owner, you will have plenty of company when considering your business succession options. But, if you really want to achieve both your personal and business goals when transferring your business, you need to be one of the few individuals who will take action well before any transition takes place.
Over the next few months, we will consider some of the real life issues faced by business owners as they move through the succession planning process. We will follow the story of JS Widget Company and their owners.
Jim and Steve have been 50/50 partners for over 25 years. Jim is 61 years old and Steve is 50. Jim has been thinking about retiring from the business in the next five years, but has been putting off any planning since he is not sure where to begin. Steve has no plans of retiring any time soon, but the dream of selling the business for a big chunk of cash is always on his mind. Jim recently read a magazine article about the benefits of proper business succession planning. Jim decides to contact a business succession planning advisor to find out some of the basics. When he returned from the meeting, Jim felt more energized.
What did Jim learn?
A carefully crafted business succession plan will help you achieve both your business and personal goals. The plan will help facilitate your retirement, by allowing you to choose how and when you transition out of the business and help ensure the survival and future growth of the business.
Business succession can be a stressful time for everyone involved if not planned properly. A well thought out plan can help reduce employee and family uncertainty by providing a game plan for transition. Company value can be enhanced and future taxes minimized.
Most importantly, a well developed plan puts the owner in control of the succession planning process – a thought that Jim really likes.
Next issue, we'll examine some of the initial steps taken by Jim to begin the succession planning process. To begin your own succession plan, call me at 440-460-1980 or email rnemeth@applegrowth.com.