Creating a Business Succession Plan
March 1, 2022
No matter your age, if you own a business, you should have a business succession plan in place as part of a comprehensive estate plan. Your company, like your grandmother’s antique hutch, is an asset. If you want to decide who receives your assets and who takes the helm of what you have built, you need to have a business succession plan. Without it, the court will decide your company’s fate.
For more than three decades, William E. Morgan has helped entrepreneurs create business succession plans as part of their estate planning. If you live in or own a business in Grays Harbor County or Pacific County, Washington, including Montesano, Aberdeen, Hoquiam, South Bend, or Raymond, call William E. Morgan, Attorney at Law for guidance.
Why Is a Business Succession Plan Necessary?
There are several reasons why having a business succession plan is important. For one, you can ensure your business is not handed over to someone you don’t want to have it. They may not have the same allegiance to the company as you do or as your family does.
Family and heirs should motivate you to build a plan. Closely held family businesses have close ties to personal assets. You can help the beneficiaries of your estate avoid income, estate, and gift taxes with a well-crafted business succession plan. Moreover, should you become incapacitated or decide to retire, the plan can provide an income stream.
Developing a business succession plan allows you the time and luxury of training your successor and instilling in them the values you have espoused during your own leadership.
Types of Business Succession Plans
Your business succession plan can keep the business in the family, allowing you to leave it to certain heirs and naming a successor to run it. If you want some heirs to benefit from it financially, even if they will not be involved in running the business, your plan can provide for profit sharing and buyouts.
Alternatively, the business succession plan can call for the sale of the business when you die or when you become unable to run it. You can set forth terms for selling it to employees or to interested competitors. If you have a partnership, the plan could include provisions for them to buy your interest. You can also specify where you want the proceeds to go, such as to certain heirs or even to your favorite nonprofit organization.
Factors in the Planning Process
The planning process is detailed and could be complicated. This is why working with an estate planning attorney on your business succession plan is so important. Your attorney can guide you from the creation of the plan all the way through to its implementation.
In general, the succession planning process will involve identifying critical roles in the company that will need to be filled, as well as the critical capabilities people will need to serve in those roles. Then, you can select the best candidates to assume each one.
A successful plan will not be created in a vacuum. It will facilitate input from existing and future leaders. When it is time for the plan to be implemented, key players will have invested in it.
Change of any kind is difficult in any organization, so you can anticipate that there will be obstacles to the success of the implementation of your business succession plan. Your attorney can anticipate obstacles and help you address them in the plan’s creation.
Obstacles include not getting full buy-in from existing and future company leadership. Disgruntled leaders may challenge the plan when you are gone and construct roadblocks throughout the attempted implementation. There may be people in your organization who do not support your goals for diversity and who create silos in order to protect their sphere of authority and influence.
Moreover, there can be resistance to the implementation plan, its timeline, and measuring performance throughout the transition.
Reach Out to William E. Morgan,
Attorney at Law
You have built a business. When you are gone, your voice will be silenced, unless you have a superbly crafted business succession plan. William E. Morgan will guide you through the process, provide the information you need to make critical decisions, and ensure the plan will withstand legal challenges by disgruntled parties.
You can make decisions for the future of your business now. Call William E. Morgan, Attorney at Law if you live in or your business is located in Grays Harbor County or Pacific County, including Montesano, Aberdeen, or Hoquiam, Washington. Call today.