A Succession Plan
Although hard to imagine, someday you’ll want to, or need to, sell your business; maybe lack of interest or energy, age or unexpected failing health.
You should start thinking about a sale from the day you incorporate. Having a succession plan is critical for an organized, orderly, successful sale. It creates certainty and relieves your stress.
Things to think about.
1. Who?
Who do you sell your business to: third party? key employee? Co-owner? Heir?
Questions: Who wants to be the owner & can pay you?
Who has the business savvy & skills?
2. What?
Document standard operating procedures: (org chart, employee handbook, processes, etc.).
Calculate the value. Keep it up-to-date.
Determine the most tax effective way to transfer your business.
Decide how & when you want to be paid.
3. When?
It takes time to prepare a plan. Estimate how long it will take & when you want to sell – work backwards to your start date. You’ll want about 5 years.
Regularly review your plan. Make updates. Changes in your business, in your industry, and in accounting practices and the law will impact your plan.
4. How?
Professional advisors may be needed; depends on the size & complexity, & how you want to sell it.
Always be sure to consult your lawyer & accountant.
Mary Ruijs ASE