WHY FAILING TO DO BUSINESS SUCCESSION PLANNING CAN COST A BUSINESS OWNER EVERYTHING
Business Succession Planning. As a business owner you probably have an operational plan. However, most Oregon business owners do not have an Business Succession Plan. How do the owners expect to transfer ownership and management.? You have spent a lifetime building your closely held or family business. You will exit your business. Whether it is by selling to outsiders, selling to employees, passing it on to family you will exit you business. During your life you expected your business to fund your retirement and to take care of your family when you are no longer here. Most likely, you cannot meet your goals without a Business Succession Plan.
This is you-your life’s accomplishment and hopefully your lasting legacy. You want your business to last through many generations. You cannot assume this is just going to occur. Your need a Business Succession Plan for your business. You need a Business Succession Plan. By creating an exit plan, you will have an exit strategy to meet your goal. Do you know how you are going to make that happen?
Are You Too Busy for Business Succession Planning?
No Oregon business owner would deliberately fail to have a Business Succession Plan. Many business owners have an Estate Plan,. Far fewer have a Business Succession Plan. The reality is that the majority of business owners are so consumed with the day to day operation of their business that they are putting at risk their business, business assets, and personal asset. If you do not have a Business Succession Plan you are putting your retirement and family’s well-being. at risk. There is a reason the majority of businesses do not survive the first generation-lack of business succession planning. The sooner you start your business succession planning, the more options available to you . Early planning creates better odds thatand the more likely your business will survive the first generation.
Baby Boomers Own 70% of All Businesses and Most Have Not Done Their Business Succession Planning
The current crop of business owners are the baby boomers. According to various studies, the baby boomers have failed to plan for their business succession and retirement. Nearly 70% of all businesses with employees are owned by these baby boomers. For many of these baby boomers their wealth is tied up in their businesses. However, only a small minority have a Business Succession Plan in place. For this group of baby boomers, they may not be able to retire, may lose value in selling their businesses, or see their businesses fail when they can no longer provide leadership and knowledge. How can these baby boomers protect their biggest asset?
Create Your Oregon Business Succession Plan Now-It Wasn’t Raining When Noah Built the Ark
You don’t wait to create your Business Succession Plan until it starts to rain disaster. Remember, it wasn’t raining when Noah built the Ark. Take the example of Ronald, who had a successful construction business. While he had some equipment, most of his business assets were tied up in real estate. His company not only constructed commercial and residential buildings, but his property management company was also very successful . Ronald owned a very profitable business.
Ronald Failed to Create To Do His Business Succession Planning
Ronald runs the day-day- business more than full time. Ronald is a baby boomer and realizes that his 60 hour work weeks have caught up with him and he needs to think about a Business Succession Plan. Ronald, like most baby boomer business owners, is so busy running his business, that he has no time for business succession planning, He has overlooked planning to protect his business, his legacy, and provide for his retirement. Ronald has also neglected his estate planning. Ronald does not realize that his Estate Plan and his Business Succession Plan work together, and require coordination to minimize taxes and maximize business value. Ronald now wonders if his business will survive when he is no longer there to make the important decisions, maintain customer relations, and provide guidance and management for his employees.
Unfortunately, Ronald is diagnosed with a heart condition at age 63 and cannot devote the time to his business that he has done all his life. Sales drop, the business value declines, and employees start to leave the company. All that Ronald has worked for is declining in value and his retirement is in jeopardy. Is it too late to create a successful Business Succession Plan?
In Ronald’s case, his failure to plan resulted in his construction business losing its competitiveness, his property management business losing value, and family conflict with his wife who planned on a long financially secure retirement. Ronald’s son Terry had planned on inheriting a secure family construction business. Instead, Terry watches as profitability decreases, sales decline, and employee morale is at an all-time low. Terry is now worried that the business he hoped would provide him with a secure future, could fail and he would be left with nothing.
The Advantages of Generational Succession Planning
The advantages of early generational succession planning are numerous. Those benefits include ongoing profitability, having adequate cash flow in retirement, and ensuring successful continuation of the business. Business succession planning creates strong familial relationships, long-term job security for the employees, maximization of the value of the business, minimization of taxes, fair family wealth transfer when the baby boomer owner dies. The retiring business owner will save his or her family legacy.
If You Are an Oregon Business Owner Learn More About Business Succession Planning and Estate Planning
In summary, there are many reasons for an Oregon Business Owner to have a successful Business Succession Plan. An Oregon Business Succession and Estate Planning Attorney can help you understand Business Succession Planning strategies and how they will help you achieve the outcome your desired goal. Contact a Business Succession and Estate Planning attorney by contacting Pike Professional Legal Services in Salem, Beaverton or the Willamette Valley, Oregon at 503.888.0952 to set an initial FREE CONSULTATION. Contact me by email: Russ@Pike-Legal.com. For more information on Estate Planning and Business Succession Planning get my book. You can purchase a copy by clicking here.