Small business owners should consider succession planning

On Behalf of | Dec 1, 2020 | Business Law |

Many people with ties to Bucks County earn their living either running a small business themselves or being part of the business’s leadership.

These businesses, which are often family owned, can make a Pennsylvanian financially comfortable if they succeed.

For many if not most owners, their goal is to successfully pass the business down to the next generation of leadership so that the business can continue and others, oftentimes loved ones, can reap the rewards.

In order to make sure that legal conflict and nasty financial surprises do not derail a transition to new ownership, a person will want to consider business succession planning.

A good business succession plan has two basic components

An effective business succession plan has two basic components.

First, a business owner needs to make sure that his or her estate plan is up to date. Without a solid estate plan, the unexpected death or disability of a business owner can leave the future of the business in limbo. A good estate plan for a business owner may include wills or trusts, stocks that automatically transfer, life insurance and other transactions.

However, although is important, estate planning is just one step in a business succession plan. At the level of the organization, the owner has to make several important decisions.

For instance, she will want to designate a successor and make it clear why she is doing so. Alternatively, she may decide on just selling her interest in the business.

The overall value of the person’s business interests and when and how he will step away are also important considerations.

As is the case with an estate plan, implementing these decisions properly will require important legal steps such as drafting and executing business agreements or other documents.