Not having an estate plan in place for your business risks undermining a lifetime of work
Proper estate planning helps to provide for your loved ones, business partners and employees who rely on your business; minimise tax exposure; and provide clear instructions on how the business should proceed. These plans are also critical in case you’re incapacitated.
Not having an estate plan in place risks undermining a lifetime of work, jeopardising the livelihood of your family and your business partners. Owning a business is time-consuming. Your focus is on managing the day-today tasks while growing the business.
There’s little time left over to think about anything else, especially what would happen if something were to happen to you. Not having an estate plan in place risks undermining a lifetime of work, jeopardising the livelihood of your family and your business partners.
Create succession and exit plans
Consider these two different scenarios. In a succession, you’re turning the reins of the business over to the next leader. In an exit, you are selling or shutting down the business. When deciding whether to sell, close or pass along the company you’ve built, you need to consider a number of factors.
On a personal level, are you ready to retire or find you’re working too many hours? Are you simply no longer passionate about the business and ready to try something new? Answering these questions should provide clarity into your next steps.
Exit plan
If you wish to sell your business, you need an idea of the value. In fact, even if you aren’t looking to sell, it’s smart to always have a ballpark idea of the business’s market value.
Establishing an exit plan early on in the life of your business is crucial if you’re to extract the highest value from your investment of time and money. Exit plans are not static documents, however – they’re fluid, and should be reviewed as the company evolves. This ensures that plans remain achievable and provides the best chance of securing the highest return on sale, whether the business is intended to provide an income until retirement, or you intend to sell your company sooner rather than later.
Succession plan
Succession planning is becoming increasing critical for all businesses. It is the process of identifying and developing potential future leaders or senior managers, as well as individuals who could fill other business-critical positions, either in the short or the long term. The aim is for organisations to have greater visibility of individuals who are interested in filling key and/or new roles effectively. A well-thought-out succession plan reduces the risk of significant disruption when you lose senior personnel. The process of succession planning is critical to ensuring your business can continue to thrive when key people leave.
A well-thought-out succession plan reduces the risk of significant disruption when you lose senior personnel. Without a succession plan, businesses can find themselves without adequate management and leadership where it is needed most.
Ellis Bates are here to help you through this essential business planning.
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