At some point, you are going to want to walk away from the company that you built. Many small business owners have no exit strategy in the event of their disability, retirement, or death. Most are focused on business survival and/or growth. However, you want to make sure that your company is going to be successful and family interests are secure in your absence. This is where business succession planning and exit strategies become important.
What exactly is business succession planning? What exit strategies can be utilized?
Business succession planning should be considered as early in a business’ life cycle as possible. Some strategies may rely on long-term planning for interest transfers and should be coordinated with Federal & State gift and estate tax laws. Business succession planning not only includes the transfer of ownership rights, but also choosing the person or group of people to lead your company. It is important to choose someone who is reliable, will represent your brand well and is well respected by those who work for you. You want a strong leader who will not be tempted to jump to another company in the future. In other words, you want someone who will treat the company like it is his or her own.
There are many exit strategy options available to the business owner. They include such strategies as an outright sale of the business, lease, gifting of stock to familiy partnerships, etc. the list goes on. Not to be overlooked are the various funding mechanisms once a strategy is determined. This could include use of life insurance, earn-out agreements, and seller financing. There is no “one plan fits all” in developing a succession plan and exit strategy for a small business owner. You must be sure to consider and understand all of the options available to you. Many have complex tax consequences. Langdon & Company LLP provides financial consulting for Raleigh NC businesses and their owners by designing and implementing a plan, as well as monitor benchmarks throughout the term.
You don’t want your company to be left in limbo after you retire. Therefore, create a succession plan that will leave the company in good hands now and into the future. Although succession planning may be a complex process, contact Landgdon & Company LLP, as they can make it easier with their services provided.