At some point, most business owners wish to move on from their business. Succession plans are crafted to allow business owners to leave their businesses smoothly. Some businesses create their succession Read more
At some point, most business owners wish to move on from their business. Succession plans are crafted to allow business owners to leave their businesses smoothly. Some businesses create their succession plans when starting the venture, and others wait until they are actually looking at moving away from their business to begin the process.
Why might a business create a succession plan?
There are many reasons that a business owner may wish to cease their involvement with their business. The most common are:
Developing a plan
There are no set rules on how to plan a succession, though businesses typically consult with their accountants, lawyers and business coaches before they begin the process. The details which are typically included in a succession plan include:
Keeping the business in the family
Family businesses typically make succession plans to move ownership of the business down the generations. To do this successfully, it is important that they consult with lawyers and accountants to ensure that the legal and financial obligations do not harm family relationships.
A buy-sell agreement is a contract between the owners of a business outlining what will happen if an owner dies or chooses to leave. The agreement will determine:
The other options available to owners when they want to cease their involvement with their business are:
Business owners rely on accountants, financial advisors and lawyers to ensure that they create legally binding and sensible agreements when it comes to moving away from their business.