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The Importance of a Business Succession Plan

On Behalf of | Sep 15, 2021 | Estate law |

Good estate planning accounts for all of your assets in the event of your passing. Accounting for a business you own specifically calls for a succession plan. Unless you expect your business to default away after your passing, choose a successor for your company now—in the event of the unexpected. Just don’t take estate planning as reserved for an older population in Connecticut. For the benefit of a successor and your business, determining your succession strategy protects your company and its assets.

Here are some important reasons to get your succession plan in order now:

Goes Into the Hands of an Ideal Candidate

Businesses create succession plans to ensure that the ideal successor is predetermined. The actual work of planning consists of analytical steps you take to vet an ideal candidate. The idea of your business being open to any new leader poses a talent risk if that candidate wasn’t hand selected. Leadership is left to debate if there is no successor assigned to manage your assets.

Determines a Purchase or Sell Price

Being a change in ownership, a business succession plan gives you the confidence of selling or merging your business with specific requests. Should you have business partners, you can determine what percentage you own among them. This includes what or any money your exit grants you, which is detailed and documented. You can then expect a smoother transition in the event that you’re incapable of ownership.

Gives Security to Suppliers and Employees

Small businesses with employees improve their continuation rates by accounting for business resources via a succession plan. Further, employees look for security in the jobs they work, so having a succession in place can increase their confidence in you. For many C2C businesses, ensuring that clients remain long-term is pivotal. A succession plan gives suppliers and retailers reason to invest in you indefinitely.

Business successions that are planned out in detail encounter a transfer of leadership that can happen effortlessly. Whether family, clients or employees are at stake, however, failing to put your business into an estate can be financially damaging.