What Happens When I Quit or Die?
Succession planning for a business is one the toughest jobs a business owner has to face. How do you sell the business, pass it on to heirs, (if they are interested, willing and able to continue) or just close the doors and call it a day?
A going business concern is dynamic, exciting and normally profitable. However, there comes a time when one must think about succession planning and what happens when the principal is no longer able to work, looses interest in the business, wishes to retire or dies unexpectedly. As distasteful as these thoughts are, one has to go through the full thought process to ensure if he/she wishes to not only take care of their customers and clients, but also their employees and/or family members who may depend upon the business.
Developing a succession plan requires thought and careful planning. The value of the business, the hard physical assets, i.e., building, equipment, parts inventory must be determined. The value of the “soft” assets must also be determined. The customer goodwill, the customer list, any unique or special skills and abilities that your firm possesses must be identified and monetized in order for the business owner or his/her estate to receive fair value from the business.
The time to begin this process is the day that you open the door! This advice might seem counter intuitive, however, research has shown that it is not! Good planning and successful plan execution occurs when you begin, because, as you may recognize, one day this time will come. It might as well be as you begin and make decisions that support that decision later.
We recommend a team of advisers to help you in this process: We suggest the following individuals:
- Business Consultant
- Valuation and Business Accountant
- Business Attorney
- Life Insurance/Financial Adviser (Key Man Insurance provider)
Each team member brings a wide and diverse background of experience to the table. It is this experience that will ensure the following:
- The business will continue to operate
- Family members who depend on the business will continue to have resources
- Employees who depend on the business will know a “path forward”
- Your wishes will be maintained
The worst thing to occur is to either elect to sell, quit, close or die with no plan in place. In these instances, the real value of the firm is not realized, assets of value may be sold at a lesser value than market price and individuals whom depend upon the business may be “out in the cold.”
We discuss succession planning in greater detail in this article.
If you need help, contact our firm by either email, [email protected] or call us, 817-386-3032. We want to help.