By Sarah Stewart Legal Group
Entrepreneurs spend all day every day working in and thinking about their businesses. More often than not, entrepreneurs, and especially small business owners are the human resources, customer service, IT, and every other department of their businesses. So, understandably, it can be difficult to plan for the time you may need to leave your business.
Leaving a business is inevitable, whether it be through a buy-out, incapacity, or death, all business owners will eventually give up their businesses. So, there’s no better time than now to plan for your exit. Today, we address the items you need to consider to plan your exit.
(1) Succession Planning
Every business needs a succession plan. When making a succession plan, you need to consider the following:
- Who is your Successor?
You want to review every employee and decide who has the skills necessary to take your place. You may want to speak to your Board of Directors or other professionals to help you. Experts suggest choosing your Successor at least 15 years before you plan to retire so you can properly train and groom them.
- How will you train your Successor?
First, you need to know what makes your company work. What departments are the most important? What functions are crucial? Once you know, you will want to train your Successor in these areas.
- How long will the transition take?
You need to make a timetable. Decide how and when to shift control of your company. The timetable helps keep your Successor on track in training and helps managers and employees know what roles you and your Successor will handle every day.
- Are you prepared to retire?
Make a retirement plan. What do you want to do when you retire? Then, initiate those plans by saving the right way and the right amount.
(2) Disability and Incapacity Planning
You may not always be able to choose when you leave your business. Life happens to all of us. Be sure you have enough insurance to cover you and your business if something happens to you. Disability and life insurance can protect you, your family, and your business from your worst case scenarios.
Though it can be difficult to think about, planning properly for leaving your business is important. Your plans affect your family, your employees, business structure, and taxes. Always reach out to professionals to reach your planning goals for your family and business.