SUCCEEDING AT BUSINESS SUCCESSION
Family businesses account for 64% of the U.S. Gross Domestic Product (GDP) and account for the majority of new jobs, according to the Conway Center for Family Business. Small businesses are the backbone of the economy. Unfortunately, many small business owners are so consumed by running the business that nearly half of them do not have a succession plan in place.
3 Steps to Succession
There are three basic steps to creating a business succession plan: identify your goals, determine how to approach your objectives, and implement a plan.
Identifying your goals is the crucial first step for your plan; determine what you would like as an end-result for your business. Do you want to still be involved in the company? Do you want to create a legacy for your family? What values do you see in your business, and how do they relate to the people that work for you? What are the tax implications to succession?
Determining how to approach your objectives is next. If your goal is to have your company be employee-run, consider setting up an employee stock ownership plan. Depending on your goals, you might consider other buy/sell agreements, creating gift shares, or setting up trusts.
Implementing a plan should be the last step to get the ball rolling. Not every plan remains perfect, so you should regularly take the time to review the plan in light of economic changes, personnel changes, and evolving business goals. To be sure it remains current, be attentive to any events such as divorces, profitability changes, or any important deaths in the company.
FSG Understands Planning for the Future
From valuing your business to creating objectives that will meet your company goals, creating a business succession plan can be an arduous process. With the many tax rules and regulations to navigate and the futures of both the business and heirs to consider, having a trusted professional craft your succession plan brings security and peace of mind. FSG can help you examine your business needs and set up your plan. Please contact us today to protect the future of your business.