Helping small business owners develop extraordinary businesses that really work for their customers, their employees, themselves and their families

Does your business have an endgame?

Will your business continue when you retire?

Who will take care of your work in process if you become disabled or die? If you are a sole proprietor, do you have an agreement with another sole proprietor to “cover” for each other when one of you is sick?

Do you have partners in your business, including other shareholders in a closely-held corporation? If you discover you can’t continue to work together, is there a written plan for splitting up included in your partnership agreement or is there a separate buy-sell agreement? Some people believe that’s the most important provision in contracts and partnership agreements.

If one of your partners dies or is disabled, do you have a written plan to buy the partner or the partner’s beneficiaries out, possibly funded with life insurance and disability insurance?

What is the ultimate plan for the business? A buy out? Is the business substantial enough to attract suitors? Are any potential suitors compatible with your customers and employees?

Should your business have an Employee Stock Ownership Plan (ESOP), with funding subsidized with tax benefits, and employees positioned to continue the business?

Have you trained one or more key people, grooming them to be your business successor(s)?

Are any of your children interested in being your business successor? Do they have the ability to do so? If more than one child will continue to work in the business, what will be the “chain of command”? Will any other employees accept their leadership? How will you provide for any brothers and sisters who won’t be business successors, to be fair to them? Have you discussed this as a family?

Have you consulted with an attorney and a tax advisor for advice about tax considerations of your agreement and for writing or reviewing the agreement?

Do you review your business continuation plan at least once a year?

These aren’t pleasant thoughts. They are important ones.

Many small business owners, especially sole proprietors, discover, too late, they can’t find a buyer for their businesses at retirement and simply walk away from their businesses. Their families receive no value from the businesses they spent a lifetime to build.

If there is no successor or other buyer for the business, hopefully the owner has at least provided one or more substantial retirement accounts, other investments, and life and disability insurance to provide for themselves and their families.

I hope you’ll make a personal resolution to review the succession plan for your business, or put one in place during this year.

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Helping small business owners develop extraordinary businesses that really work for their customers, their employees, themselves and their families