SUCCESSION PLANNING VITAL FOR BABY BOOMER BUSINESS OWNERS IN TEXAS
Texas baby boomers should be gearing up for the future. Over the next few decades, millions of baby boomers will be retiring, selling their businesses and business interests or passing them along to family members. While the economy is currently looking up, as more small companies hit the market, sales may not be as easy as they are today.
One way to ensure you are on the right path with your business is to establish a business succession plan. Here are some important considerations if you think you are too young or your business too small to need a plan at this point in your career.
TIME IS OF THE ESSENCE
It is never too early to start planning for your retirement or the succession of your business to the next owner. Business succession planning is essential no matter your age or the age of your business. An unexpected turn of events can suddenly create a need for a plan of action regarding your company and you do not want to be caught unprepared.
Similar to personal estate planning, you want to make sure your “child” – a business you started from scratch and grew over the years – is protected from creditor claims, tax liability and potential disputes. If you have not done so already, start formulating your long-term business goals.
As a business owner, create a few options for yourself, contemplating various scenarios that may occur. An injury or serious illness may forever alter the course of your career or that of a key manager. Your children may decide at the last minute that they do not wish to take the helm of the family company. A failing or booming economy may take your business in a completely different direction than you originally intended. Your own divorce or the divorce of a co-owner may jeopardize corporate assets.
While you cannot anticipate every variable, it is good to establish general backup plans, particularly in the event of an untimely death or early forced retirement. Ask yourself and your management team the hard questions and outline various courses of action it can take if you suddenly are no longer there to answer their questions or guide the direction of the ship.
Not only should you and your directors orally discuss business succession planning, you must put your plan in writing. Just as you did when you first started your business, commit your vision and mission to writing and create a framework that your managers, family or successors can follow to keep the business successful after you are gone.
Once you create your plan, do not simply shove it into a drawer, forgetting about it until it is needed. Pull it out and review it on a regular basis with a trusted advisor, making revisions or adding provisions as needed.
CONSULT A LAWYER
If you do not have a business succession plan or have not recently reviewed your plan, consult an experienced business and estate planning attorney. A lawyer knowledgeable about all aspects of business and corporate law, asset protection and planning techniques can help you create a plan that ensures the future of your business vision.