As a small business owner, you bring the skills to the job and take all the risks of ownership…meeting payroll, buying equipment, and scheduling jobs. Through hard work, savvy business decisions (maybe some lucky ones too) and perseverance, you create a business with a value that should be retained for your family and/or your employees. The solution to achieving just that is called succession planning.
Truth be told, succession planning is not at the top of most business owners list until it is late or too late. If a car accident ended the life of the owner or a serious illness struck, what happens to the business and those who depended upon it? The latter certainly includes the customers, the dedicated employees and, also the owner’s family! Viewed in this light, the importance of a good succession plan becomes evident.
Starting a succession plan doesn’t have to be a complicated process. In the beginning, the business owner will identify the person who might continue the management of the company. It could be a spouse, an existing partner, an employee, or a son or daughter. Since a car accident is easy to understand, an immediate “contingency plan” should be put in place to assure that the business will continue to operate. From that, a plan is designed to transfer ownership in a way that the new owner can afford it and the deceased owner’s family can continue an income from the sale of the business.
Sounds simple but there are enough “moving parts” that a business owner pushes back on taking action…or just delays any thinking about it. If you are the owner, that is the wrong decision.
A simple start to this process is to ask yourself, if a willing buyer approached you today, how much would you want to be paid to walk away from your business ownership? Whatever that number is, how much do you think your family would receive if you had been killed in a car accident last night? Sadly, “fire sales” do not bring the best price for a business. And, all those who depend upon your business deserve a better outcome than leaving it to chance.
Where do you start? Contact NUCA to have a preferred advisor discuss with you how a succession plan could work for you.
This article was written by Steve Vogt, Owner, Compass Risk Management LLC (compassriskmanagement.net), a NUCA Sustaining National Partner.