Texas is home to over 2 million small businesses that employ over 4 million people in total. Small businesses represent a huge investment of time and effort by the owners, but the entrepreneurs sometimes neglect one of the most important aspects of a business: Every company needs to have a succession plan in place. This ensures that challenges like death, divorce, disability and the dissolution of partnerships are handled properly.
Be ready for change
A succession plan is a lot like an estate plan but for a business, not an individual. Having a plan in place makes it easier to transition out of a company. It establishes the value of the business and lays the groundwork for transferring ownership.
For some entrepreneurs, this means passing on the business to a family member. In cases where children aren’t interested in taking over the business, it can mean grooming a different successor from within the firm. Having an idea about who will take over and how can simplify issues like retirement planning.
It’s also important to revisit this succession plan every few years. For example, the value of a business will change depending on its profit and loss statements. Market sentiment, in general, also has a role. Knowing what a business is worth makes it easier for owners to know when to sell.
Bring in professional help
Selling a small business is a great way to fund a retirement, at least partially. Writing, understanding and executing a succession plan can mean real peace of mind when challenges arise in life. An attorney who understands business law may be a wonderful resource when writing this kind of document.