Probably one of the most critical aspects of owning a business is often relegated to the top shelf in the closet, set aside for another day. Business succession begins the day the business opens. While you are building your business, thought of succession planning seems far away in the distant future.
What business owners often miss is the reality that decisions made today, may interfere later with a long range goal to pass long or sell the business to family, employees or outside sources. Estate taxes can claim in excess of 40% of a taxable estate, sometimes resulting in the demise of the business you fought so hard to build and sustain.
Practice these important steps towards building a plan that is flexible and will adapt as your business grows and matures:
- Begin with the end in mind. Have an idea of how you would close your interest in your business. Whether by sale or transference by inheritance, other decisions along the way will be impacted by your vision.
- Financial Stability. Every business experiences different levels of financial stability. It has been said that starting a business is relatively easy; sustaining a successful business model separates the startups from the businesses that can run the distance. Know how to read a balance sheet and profit and loss. Learn the financial standards in your industry for customary expense items and apply a periodic test to your performance. Seek professional counsel before each expansion or change in product line.
- Plan your estate. Your personal estate plan is a significant step in your overall business succession plan. A revocable living trust can be changed and updated as your business grows and expands. You don’t have to have it all figured out immediately. Build the foundation of a solid plan and customize further as your future unfolds.
- Personnel Development. Hiring the right team is every business owner’s dream. Hiring the person or persons with succession in mind will move you towards that end much more quickly than if you only hire for the job at hand. Training, mentoring, development of their skills. Time will tell if you have your succession answer. It can take years to find and develop the talent it will take to replace you, even from within your family. Even if someone does not work out, your skills in recognizing your negotiable and non-negotiable requirements and expectations will be better formed for the experience.
- Rely on Periodic Professional Reviews. Qualified advisors including your CPA, attorney and financial planner can play a key role in the development of your overall business succession plan. The ultimate success of any business is achieving its end goal. Professional stewardship is a valuable resource that will save you many a misstep and help you stay the course.
- Begin Now. Simply put, there is no time like now to start your succession plan.
With Offices in Madison, WI and Evansville, WI, the attorneys at Wilson Law Group assist clients with Estate & Business Planning, Probate & Trust Administration, Elder Law and Medicaid Planning throughout Southern Wisconsin including Verona, Middleton, Sun Prairie, Cross Plains, Oregon, Black Earth, Janesville, Jefferson, Fort Atkinson, Baraboo, Reedsburg, Richland Center, Mount Horeb, Monroe, Beaver Dam, Dane County, Rock County, Green County, Iowa County, Richland County, Sauk County, Columbia County, Dodge County and Jefferson County.