Why Business Succession Planning Makes Sound Business Sense
It is easy for involved business owners, to focus so much on day-to-day affairs and activities centred on growing the business that you overlook the possibility that certain circumstances might change! For one, things are bound to get more complex as the business expands.
As your business grows, you employ more people, acquire assets, and further your products and services offerings. It is also possible that the unforeseen happens and a partner, co-owner or principal passes away, becomes disabled, or leaves the business for another reason, such as a resignation or taking retirement.
Should such an event occur, it is important to be able to protect your business and ensure its continuity, look after the welfare of your staff and employees as well as your own interests. Here is where business succession planning comes into the picture – creating a clear way forward for you to take your business into the future.
What is business succession planning?
Business succession planning is a formal process that helps you minimise disruptions to your business. It covers strategies for an orderly and organised handover of your business from one owner or manager to another when the situation calls for it.
It helps keep financial adversities from affecting your business by maintaining and managing suitable exit strategies and other planned approaches as a part of the succession plan. For example, the terms of your business succession plan may help you avoid additional borrowing or asset depletion while you face an adverse circumstance.
It also ensures that any benefits that arise from the sale or handover of the business are then directed to the rightful beneficiaries. Thus, covering all aspects and ensuring clarity.
What can your plan include?
A good business succession plan should cover all important aspects and cornerstones of your business. Here’s a list of possible areas to include:
Planned successor: Person or persons identified as the planned successor(s)
Operational considerations: Identify the key operational tasks that need to be maintained for business continuity.
Financial considerations: Identify the market value of your business and the financial implications of managing it.
Training and induction: Identify the training programs that will help the successor to grasp the essentials, participate and become productive.
Timeline: Identify and create a realistic timetable for the transfer of responsibilities covering essential areas of business.
Legal considerations: Identify the legal requirements that must be met. For example, the transfer of any patents, licenses and registrations.
Insurance: Including insurance, such as key person insurance, business expense insurance or life insurance is usually an essential part of your business succession plan to protect you against unexpected and unplanned events.
Consider consulting with a professional when you develop your business succession plan. Advisers are experienced at identifying various financial risks and opportunities and ensuring that you haven’t left anything out.
What is your financial advisor’s role in creating a business succession plan?
Your trusted financial adviser has the know-how and expertise to assist you in creating a robust business succession plan for you. Here are a few aspects that your financial adviser can help you with, understanding and anticipating your specific needs and objectives:
Identifying key management and ownership-succession issues well in advance
Creating frameworks for the identification and development of planned successors
Devising planned approaches to ensure business continuity during the transition periods
Maintaining business value and minimising risks and adverse impacts on business
Business succession planning with Oakmont
We understand that the operational demands of running a business can be all-consuming. At the same time, we know that it is vital that business leaders take the time needed to assess their business and create a robust and strategic plan.
The long-term survival of your business and the preservation of the wealth that you have painstakingly built will likely depend on it.
For private, owner-managed, or family-owned businesses, a solid succession plan can drive the growth of the business, reduce taxes, and set the stage for accomplishing more.
Invest in an obligation-free consultation with Oakmont, today. Let us help you protect your legacy.
General Advice Disclaimer The information contained on this website and in this blog-post is general in nature and does not take into account your personal situation or circumstance. It is recommended that you consider and use the information provided responsibly and, where appropriate, seek professional advice from a financial adviser. Although every effort has been made to verify the accuracy and correctness of information, Oakmont Financial Group, together with our consultants, officers, agents, and employees, disclaim all liability for any loss or damage suffered by any persons directly or indirectly relying on this information.