Most small business owners are so busy running a business, they don’t have enough time to plan for how not to run it. Writing for Kiplinger.com, financial advisor Andrew Bass advises even those who may not expect to let go of their business to still prepare today — as if they are.
Having a succession plan doesn’t mean you are going to take any action immediately, it just means you and your business have a path going forward.
Why you should have a plan for selling your business
Again, the point is not to put your business up for sale. The point is that going through the type of process one must undertake if they were selling their business provides a great deal of insight. Later, this not only can help you plan for the future but better manage it today. Here are some benefits:
- You can avoid the stress of not knowing what will happen if you suddenly can’t operate it due to serious illness or tragedy
- You will know more about your future cash needs
- You will have more of an understanding about the value of your business
- You will understand more about the tax implications of selling your business
- You can take advantage of current tax laws and potential changes
- You will understand and clarify a future management structure
- You can help ensure the business will continue to benefit customers, employees, new owners and your family
Stay aware of taxes and policy changes
Going through the process of succession planning will not only help you focus on many operational and financial aspects of the business, you will also learn how various approaches to selling it can be related to tax policy. “Part of running a successful business is having a smooth succession plan in place and ensuring a proper, tax-efficient transfer of ownership. This will help achieve long-term family goals,” says Bass. Factors like “valuation discounts” and estate and gift laws can help determine your succession approach.
Determining the Value Of Your Business
If someone offered to buy your business, would you know if the price was low, fair or fantastic? Should you rush to get a deal closed? Early planning can mean you can maximize the value of your business before you sell. Knowing what your business is worth lets you know if an offer is good or bad, and whether it is worth considering.
VIA | Kiplinger.com