Building a business is hard work. Protecting and preserving it is even harder and overlooked by business owners.
While many owners expect family members to take over the business (69%), very few have actually made plans to make sure their wishes are accomplished (26%), even though they realize the importance of estate and succession planning as is an integrated part of that planning.[i]
A succession plan is complex, time consuming and involves attention to details along with many hard questions which need to be answered for a comprehensive and effective succession plan. It is also the key element in maximizing the return on the investment of your business. This is the big financial payout, the sale of your business.[ii]
SOME MAJOR QUESTIONS AND ISSUES TO ASK YOURSELF!
What if a shareholder wants to sell their interests?
- Is there a right of refusal for the other owners?
- What are the financing arrangements?
- What are the recourses if you fund the buyout especially if the funding is over a long period of time?
- What is the arrangement if the business fails, how will you get your money if you financed the sale?
Who steps in your shoes if you want out?
Not everyone has the luxury of leaving a business when and how they want to. Things like death, disability, and situations are uncontrollable.
- What are your contingency plans when a trigger occurs (death, health, non-voluntary situations)?
- Do other members of the firm have access and authorization to use funds to keep the business going if there is such an event?
- Does your family take on personal obligations for financial notes and loans you have signed personally to fund your business operation?
- Do you have estate documents and health care directives, should you have a disability or become incapacitated?
Taxes- and the planning for them Continue reading “Critical Questions That You Need To Answer If You Own A Business!”