Business owners have to make decisions for their company, and they need to ensure that they are taking steps to plan for what will happen to the business when they are gone. One decision that you have to make if you own a company is what you want to happen to the company when you are ready to retire or pass away.
This is known as the succession plan. You can set this up now so that you have a say in what goes on when it is time for it come into play.
Your company needs a succession plan to minimize the risk of cash flow problems if something happens to you. When you set up the plan properly, the benefits are available immediately so that there won’t be a chance of an external takeover of the company.
It also enables you to make your wishes known, and it lets everyone involved in the day-to-day operations of the company know the plan. It can also help your family members because it can ensure that your estate is settled in a timely manner if you do pass away.
It must state the plan for the company if something happens to you. If there are multiple owners, will your share be bought out by them so that the company can continue? If you are the sole owner, you might opt for the company to be sold as-is if you pass away.
If you want the company to continue on as is after you pass away, you have to set terms. Not only can this help to smooth the transition, but it can also provide customers, employees and vendors with a sense of stability in a time of massive change.
Second, you need to determine who is going to take your place. The sooner you decide this, the more time you will have to teach them the ways of the company. It also gives you time to introduce the person to the people they will deal with when you are gone.
Finally, think about whether life insurance policies can be a beneficial part of the succession plan when you pass away. Some business owners use these to enable other owners to buy out their share of the company. If you plan on doing this, you might opt to discuss this option with your attorney to find out exactly what needs to happen.