Planning for Your Business’s Future
Succession Planning
Being a successful Southwest Florida business owner, you know the importance of the day-to-day attention required to ensure your business continues to thrive and meet quarterly goals. Planning for your business’s future includes succession planning.
You cannot afford to overlook the inevitable. You won’t always be here to personally to run the daily operations or supervise your company’s growth and sales. Having a plan for the future ensures that your hard work and triumphs won’t end with you. No matter the size of your business, you owe your loyal employees and loved ones a plan for business succession.
Business Succession Planning
Business succession planning is the process of passing control of the business to others. Like estate planning for an individual, a succession plan outlines how your business will run after you retire, become disabled, or die. It also plans if a key employee retires, resigns, gets fired, becomes ill, or dies. It ensures that your business will continue to run smoothly without interruption. Planning for your business’s future will give you the peace of mind that you have done all you can.
The Basic Elements of a Business Succession Plan
Here are some basic elements to consider as part of your business succession plan. But remember your business is unique and your individual goals and needs of your company should personalize your succession plan.
In general, Attorney Nici recommends three basic elements that should be included in all business succession plans he designs for his Naples and Southwest Florida clients.
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 (Management)
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 such as salary, bonuses, stock, related to the transfer of leadership. You should include how long the transition will take. Also include whether legal documents, such as employment contracts and non-competes, will be necessary.
For example, your spouse may be given ownership of the company but the actual running of the company will be done by who you name to assume leadership of the company.
3. Financial Planning
The succession plan should consider and plan for 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
As an attorney who has helped many businesses make a business succession plan, Attorney Nici is qualified to help guide you in planning for your company’s future.
- Step 1. His first step would be to help you identify the goals and objectives of your succession plan – what do you want your plan to achieve. Your objectives will likely include the 3 elements we described above but will also include your personal ideas and vision. For example, you may have an idea that you want the management to stay in the family and identify a family member who would be perfect. Attorney Nici will guide you on how to make that happen.
- Step 2. Next, you will assess your business’s value, current structure, and operations, including the roles and responsibilities of key personnel. You will want an accurate understanding of the business’s current market value and maybe its future potential value. We will want to identify the company’s assets and liabilities(debts). 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.
- Step 3. Thirdly, you want to identify successors for ownership and leadership. In general, there are three options to consider for potential successors—family members, key employees, or a third-party sale. Leaving ownership to a loved one, given its value and ability to generate income and profit, can give you peace of mind that you have provided for that loved one. When making this decision, you will want to identify experience, leadership skills, and other personal qualities. Identify any training or leadership development your successor will require.
- Step 4. Create the required succession documents. Working with James Nici as your experienced Naples business planning attorney will ensure you have a comprehensive succession planning packet. These documents need to clearly memorialize your wishes. With his knowledge of Florida and federal tax and other relevant regulations, attorney Nici will help you to take into consideration tax implications, financial arrangements, non-compete and employee contracts, insurance coverage needs, and training requirements.
- Step 5. The final step of business succession planning is to ensure that your personal estate plan coordinate with the wishes of your business succession plan. These two plans should work together. 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 for Your Business Planning Needs
If you have questions about properly planning for your business’s future as well as your estate plan, you should contact us today. You have worked hard to build your business, your brand, and your reputation in the business community. Do not risk it by not planning ahead. Our goal is to help you take this step to preserve your legacy. Your customers, employees, and loved ones are counting on it.
Contact our office today at (239) 449-6150 or use our web form to set up a free consultation.
