Estate planning can involve creating a will or trust, but it also can include making a business succession plan. This plan identifies and prepares for the transfer of ownership and control of a business to a new owner. It can help the current business owner ensure their wishes are fulfilled after their death or retirement.
Business succession plan
A business succession plan involves creating an outline of how the business will be transferred. This may be through a sale, a transfer to a family member, friend or employee, or another arrangement.
It can identify the strengths and weaknesses of the business and can help prepare the people who will take over the business for their new leadership roles.
First, the current business owner needs to identify their objectives. Sometimes, the objective is to find a buyer and sell the business. A business valuation can identify the current market value of the business. This will inform the terms of the sale and any tax implications.
In other situations, the business owner may want to plan for the business’ long-term success. This plan may include supporting their family members after the business owner’s death or retirement. The plan should include a timeline of when tasks should be completed and preparation for how the plan will be communicated to the stakeholders in their business.
It should also include what will happen if there is an unforeseen event, including who will be immediately in charge of the business.
It’s helpful to regularly review the plan to make sure it is still relevant to the business. It can be updated as circumstances change.