Small businesses are the backbone of this country. They employ more than half of the domestic workforce and contribute greatly to the economy. 9 out of every 10 small businesses are family-owned. But most of those do not make it past the third generation of family ownership. Many small business owners neglect to do one thing to ensure their business survives when they are gone – create a business succession strategy.
A business succession strategy is a plan by which the ownership of a business is passed from an owner to a buyer with protections to ensure both parties’ best interests are accounted for. There are many considerations small business owners must take into account such as the financial and legal aspects of succession planning. Estate planning lawyers in Wright County often discuss succession strategies with small business owners during the early stages of business planning since it’s never a guarantee how long the business owner will be able to run the day-to-day operations. Illness, incapacity, and even death can strike at any time, so small business owners in should think about a succession strategy from the get-go.
For starters, business owners should consider whether they want the business to stay in the family, transition to a business partner or trusted employee, or if they would like to sell to an outside party; it all depends on the individual’s goals. In addition, the business succession strategy can change depending on what type of entity is being dealt with, whether it’s an LLC, Corporation, Partnership, or Sole Proprietorship. A Minnesota estate planning attorney will sit down with the small business owner to discuss these details and determine the best course of action.
A successful business succession is something that takes years, not months, to accomplish. There are many moving pieces involved in a business succession such as a transition team, proper documentation, and sound financial planning that all have to be managed carefully to make sure the business remains viable after the transition and that both the original owner and new owner are protected. Minnesota trust lawyers will take great care to craft business succession plans that accomplish these goals and provide peace of mind to all the parties involved, often with the help of financial planners, tax professionals, and sometimes even experienced exit strategy coordinators.
A business succession strategy is one of the most important things a small business owner must plan for. If done incorrectly, a great deal of money can be lost and the business may not survive the transition. If you have any questions regarding business succession planning, or if you’d like to begin implementing a business succession strategy, please contact us at (763) 244-2949 to schedule a consultation