Business owners work hard to get where they are. Every ounce of success is hard-earned, often through many trials and tribulations. It makes sense, then, that many business owners also want to preserve their legacy and help support their loved ones by passing down an already successful business.
In this case, even the smallest of business owners should consider a succession plan. This is a foolproof way to ensure that everything ends up passed along in exact accordance with an individual’s wishes.
Preparing your estate plan
Investopedia discusses some of the basic components of a successful business succession plan. First, business owners need to ensure that they have updated their estate plans recently. It can include trusts, a will, life insurance and automatically transferring stocks. This can help out a lot in the event of the sudden disability or death of the business owner.
When it comes to the business specifically, an owner needs to pick out a successor, too. Of course, business owners may sometimes choose to sell their interest in the business instead. But most want their successor – usually a loved one or family member – to enjoy the benefits of the business.
Picking your successor
When picking a successor, the person needs to have a desire to run the business. Owners should not spring it on whoever they think is “best” without discussing it with the individual first. The owner and successor should also see eye-to-eye on the core principles behind the business, and have a rough agreement on how they want the future of the business to look.
Business owners should then consider consulting with legal help to write the final draft of this succession plan. This ensures that the business can pass on without any hiccups.