Business Succession Planning

Establishing a sound business succession plan is beneficial for most business owners and can be absolutely necessary for some.

As a business owner meeting immediate customer needs, seeking out new opportunities, and completing day-to-day tasks can easily consume all of your time. Retirement often seems like a distant speck on the horizon; and most small business owners don’t take the time to think about how they will hand over or sell their business when the time is right. 

3 Reasons to Have a Business Succession Plan

Creating and implementing a sound succession plan provides business owners and partners several benefits:

• It ensures an agreeable price for a partner’s share of the business and eliminates the need for valuation upon death because the insured agreed to the price beforehand.
• The policy benefits will be immediately available to pay for the deceased’s share of the business, with no liquidity or time constraints. This effectively prevents the possibility of an external takeover due to cash flow problems or the need to sell the business or other assets to cover the cost of the deceased’s interest.
• A succession plan can greatly aid in allowing for a timely settlement of the deceased’s estate.

The Bottom Line

Proper business succession planning requires sound preparation. Business owners seeking a smooth and equitable transition of their interests should seek a competent, experienced advisor to assist them in this matter.