If you are a business owner, chances are you enjoy your job immensely and are confident in knowing that you are in control of your destiny amid life's ups and downs. However, chances also are that you may not have given much thought to a key component of your potential success: planning for your eventual exit and ultimately, your successor.
A recent study of Wisconsin Business Owners conducted by the Exit Planning Institute shows that 93% agree that having a transition plan is important to their future and the future of their business, yet 80% have no written plan and 60% are unfamiliar with their options. Difficult as it might be to plan for the transition of your business, succession planning is critical to your business success now and in the future.
A succession plan often is done as the owner (or owners) nears retirement, but it's almost never too early and can be invaluable if an owner becomes ill or dies unexpectedly. A detailed plan clarifies who will take over the business and how the transition is structured. Having a plan in place can enhance a business' market value, establish retirement income and security for the owner and his or her loved ones, smooth any transition and help avoid potential litigation.
So, why don't more business owners have a succession plan? Research shows many individuals simply enjoy running their business and don't want to stop. Others say they are too busy or are waiting until they are closer to retirement age. Still, others hesitate because they prefer waiting for a next gen family member to take the helm rather than hiring an outside professional, even on an interim basis.
However, business and financial advisors alike emphasize the importance of establishing a succession plan to provide continuity and stability over time, even for business owners who plan to work beyond traditional retirement age. Just as critical as having a plan is determining the type of succession best suited to you and your loved ones.
As with any other aspect of your business operation, your trusted financial advisor is key to helping you establish a succession plan, to help ensure you and your family—as well as your business—have a secure financial future.
For more information, contact your Johnson Financial Group advisor today or find an advisor near you.