Business Succession Planning
If you are a business owner here in Naples or in Southwest Florida, it is critical to look beyond the day-to-day and plan for the future. Having a strong business succession plan is an important part of operating a successful business today and in the future. Let’s look at what business succession planning involves.
What is Business Succession Planning in Naples?
Business succession planning is the process of creating a plan for the ownership and management of your business in the future. Like estate planning for an individual, a succession plan outlines how your business will continue upon the death or other circumstance that leaves a business without its principal executive.
It prepares your business for the time when an owner or key employee retires, resigns, gets fired, becomes ill, or dies. It ensures that your business will continue to run smoothly without interruption.
What are the Basic Elements of a Business Succession Plan in Naples?
Every business succession plan is unique and should take into consideration business and personal needs and goals. However, three basic elements should be included in all business succession plans in Naples, Florida as well as in general.
1. Transfer of Ownership
The succession plan should address who will acquire the business at the retirement or death of the current owner and who will hold voting control of the business interest. If relevant, it should state how the new owner will pay for the business (i.e., buy-sell agreement or other financial arrangements). The succession plan should also address the tax implications of the transfer.
2. Transfer of Leadership
In the succession plan, you should also address who will take over the management responsibilities after the business changes ownership. This section should include any financial considerations related to the transfer of leadership and how long the transition will take. It should include whether legal documents, such as employment contracts and non-competes, will be necessary.
3. Financial Planning
The succession plan should consider the potential financial implications of an ownership transition, including tax implications, retirement plans, and life insurance policies to protect the business if there is an unexpected death or disability.
Creating a Business Succession Plan with the Nici Law Firm
Below are five basic steps for creating a business succession plan in consultation with Attorney Nici.
1. Identify the Goals and Objectives of Your Succession Plan
The first step to making a business succession plan is to identify the goals and objectives that you want your plan to achieve. Your objectives will likely include deciding who will take ownership of your business, deciding who will assume management responsibilities, and ensuring your personal financial future and retirement plan.
2. Consider the Current Business Structure and Value
Next, you should take time to assess your business’s current structure and operations, including the roles and responsibilities of key personnel. Additionally, you should have a clear understanding of the business’s current market value. It is critical to know the company’s assets and liabilities. This information will help you realize the risks and liabilities associated with an ownership transfer. It will also guide you in deciding whether changes are required to prepare the business for a transition of ownership.
3. Identify Potential Successors
In general, there are three options to consider for potential successors—family members, key employees, or a third-party sale. When making this decision, you should look to experience, leadership skills, and other personal qualities. During the process, you should identify any training or leadership development your successor will require. Picking a successor is a difficult decision requiring careful reflection and honest conversations.
4. Work With a James Nici, your Business Planning Attorney, to Develop Your Succession Plan
James R. Nici is an experienced Naples business planning attorney, who will ensure you create a comprehensive succession planning document(s). These documents can be complicated, and we will guide you through every step of the process. As an expert professional in business planning, Mr. Nici will help you to take into consideration tax implications, relevant regulations, financial arrangements, insurance coverage needs, and training requirements.
5. Estate Planning
The last step of business succession planning is to ensure that your individual estate planning documents are up-to-date and reflect and coordinate with the wishes of your business succession plan. Your estate plan and succession plan should work hand-in-hand. This is especially important when the value of your business represents a significant portion of your estate. Examples of estate planning documents that should be reviewed and updated include your will, trusts, and powers of attorney.
Call Nici Law Firm for your Business Planning Needs
If you have questions about properly planning for your business as well as your estate plan, you should contact us today. James R. Nici is an experienced Naples attorney with over 25 years of experience in estate planning, business succession planning, and more. Contact our office today at (239) 449-6150 or use our web form to set up a free consultation.