A business succession plan is like estate planning for your business. And just like humans, businesses have a life cycle.
First, in the beginning of our business, we may have incorporated them, gotten a tax-id number, and gotten our permits and licenses to conduct business in the state.
Then, during the life of our businesses we devote much time and money nurturing it, marketing, developing, networking, researching, and sacrificing time away from family and a fun social life. Our businesses represent a huge, valuable investment of ourselves.
And then, at the end, whether it is with our retirement, incapacity, injury, or death, there comes a time when we can no longer run our business. This business we put so much time and effort into. It is at this point, if you have done some good business succession planning, you have already secured your legacy and protected your assets.
For instance, by then, you will have already groomed a successor who is ready to step into your shoes without a hitch and you’ve made provision for your continued receipt of a portion of the profits.
Or you have already identified a buyer for your business that will pay your family market value for it. You may already have something called a buy/sell agreement in place that is funded with a life insurance policy on your life so that the buyer will have no problem coming up with cold hard cash to pay your family for the business.
These are just two examples of business succession planning, the possibilities are endless. But the bottom line is that we need to plan for the end or continuation of our businesses so that all of the time, money, and efforts we put into creating and growing our businesses does not just die with us but is part of our legacy after we are no longer here.