If you have started and grown a business venture, you understand business ownership is an effective way to achieve the American dream. You also may want your hard work to benefit your children and grandchildren while continuing to have your business meet the needs of your customers.
According to one study, 58% of small business owners have no succession plan. This is mostly due to either being too busy to plan or having a lack of planning urgency. Still, with smart succession planning, you can likely make your business last longer than a generation.
Do you have a leader in your family?
Deciding to protect your business’s future is a big part of succession planning. Another major component is finding the person in your family who is ready, willing and able to lead the business. Teaching a relative the ins and outs of your operation may be essential.
When do you want to hand over control?
Your succession plan may include a transition period where you work alongside your business heir. This approach may smooth the transition, shorten the learning curve and comfort your customers. By planning early, you have more flexibility with your transition period.
How does the hand-off occur?
You probably have many options for transferring ownership of your business venture. For example, you may gift, sell or combine the business. When exploring hand-off options, you should pay close attention to the tax consequence you, your business heir and your business may face.
Ultimately, passing your business to the next generation and beyond requires getting the technical details right. Outlining specific goals and procedures in a succession plan years before you intend to retire gives you an opportunity to tweak the plan to better meet your needs and the needs of your business.