Any Thoughts About A Successor For Your Business In Your Absence?

Have you thought about who could run your business when you can't?

For some, the considertion of someone else running your business "efficiently and profitably" can be a long and calculated thought.  For others, there may be someone already in mind like a family member already working in the business, an employee, or a respected competitor who would be willing to buy the business in an event you, the owner can not continue its operation due to terminal illness, disability or pass away.

Just like starting a business takes planning and execution, exiting a business should be planned before any emotional and burdensome decision-making event occurs.  It is important to know that if there is no exit strategy or business succession (transferring of ownership) plan in place, tangible and intangible business assets go to probate where the estate becomes the new owner of the business.  

All businesses (with the exception of Sole Proprietors) in any industry, size, and revenue should include business succcession planning to protect the business from potential loss if the owner(s) ever face terminial illness, disability or pass away.  

A DBA (doing business as), "Sole Proprietorship", can implement protection against financial loss by securing Key Man, Individual Disability insurance.  Because a sole proprietor conducts business in his/her name, the DBA ceases when the sole proprietor cease to exist. Example: "John Doe DBA JD's Lawn Service"

Implementing a succession plan for the business can minimize emotional and financial hardship on a spouse, children, parents, business partners and employees.  Evenmore, having a succession plan in place allows the business to operate with less downtime.  On a sentimental note, the legacy of its owner(s) can continue. 

In addition to the succession plan itself, it is incumbent upon the owner(s) to have funds allocated to finance the transaction of the decedent's percentage of ownership.  Business loans, insurance policies, business cash reserves, or current revenue can be resources to finance the transfer of ownership.

Who Will Be Your Successor In Your Absence?

Reach out to Morehead's Connections Consulting if you need an attorney to help you with business succession planning. Also, feel free to request a business continuity checklist to get started.

This post is not intended to give any legal advice to any of its readers. It is intended to bring awareness to business succession planning where the need should be considered.