Let's Talk Business: Succession Planning is Very Important
There is a silent killer of many businesses in the United States and our area is certainly not immune.
Statistics show us 80 – 90 percent of the U.S. businesses are family owned. However, less than one third will survive into the second generation and roughly 10 percent will make it to the third.
Business succession planning is a process whereby owners research and decide upon a plan to move forward in case of the event of death, illness, or simply transition. It generally uses estate planning strategies and there is no “one size fits all” plan. Careful consideration must be given to determine the best options. Without a plan in place, there is a high degree of the possibility of failure.
Many factors must be examined. There are issues of estate taxes, liquidity, ownership percentages, family disagreements, and capabilities of management. The uncertainty of a transition can affect the business internally among employees and externally with customers. It is so important to develop a plan and communicate to your team you have one in place.
There are many succession planning vehicles and succession planning concerns. It is important to seek the advice of an expert on such matters and do it sooner rather than later. Many believe business succession planning is at least as important, and maybe more important, than individual estate planning. Employees, customers, and family members are relying on a smooth transition. Don’t let them down.