Starting the Business Succession Planning Process? Seven Questions to Ask Yourself
The demands of running a closely-held business or a family-owned business can be overwhelming. With so much happening on a day-to-day basis, it is easy to overlook the business succession planning. Doing so is also a serious mistake. A business succession plan helps to ensure that your company is fully prepared for the future.
If you are new to business succession planning, it can be difficult to know where to start. At Arnold & Smith, PLLC, we want to make sure you and your partners have the tools and resources you need to protect your company. In this post, our North Carolina estate planning attorneys highlight six questions that you should ask yourself when starting the business succession planning process.Key Questions to Help You Get Started With Business Succession Planning in North Carolina 1. Do You Have Goals or a Vision for the Future Transfer of the Company?
Business succession planning always starts with a vision. As a business owner, your goals and long-term objectives matter. Do you what you want to happen to your company after you are no longer working? If you have not answered that question, it is the first step in the process. Make sure you and your business partners have clarified a vision for future transfer of the company—whether to a family member, other people currently in the business, or an outside party.2. Is There an Identified Successor in Place?
Family owned business and other closely-held corporations make up a key part of North Carolina’s economy. These types of companies rely heavily on the day-to-day efforts of the business owner(s). For this reason, there can be a huge disruption if a business owner decides to (or is forced to) leave the company. A business succession plan should identify specific successors who can take over when necessary.3. Do You Know the Current Market Value of the Business?
It is difficult to create a truly effective business succession plan if you do not know the current market value of the business. If you are starting the business succession planning process in North Carolina, it is highly recommended that you get a comprehensive business valuation. When you understand the value of your company, you will be in a better position to capitalize on opportunities and carry out your goals. If you have any questions about obtaining a business valuation in North Carolina, our Charlotte business succession planning attorney can help.4. Is there Enough Liquidity to Carry Out the Succession Plan?
The single biggest business succession planning mistake is the most common one: Not having a plan at all. The second biggest business succession plan mistake is also quite common: Not ensuring that there is adequate liquidity for a transition. If ownership of the business will be transferred to other parties, it is imperative that they have access to adequate funding to complete the transaction and maintain business operations. As an example, if you have a buy-sell agreement in place, it is imperative that you and your partners have access to the financing needed to carry out the specific terms and conditions of that agreement.5. Have All the Necessary Conversations Happened?
It is crucial that everyone is on the same page. A lot of conflict occurs in family businesses and closely-held corporations when people have different ideas of what will happen in the future. To avoid disputes, communication is key. Make sure that all the important conversations have taken place so that everyone is aware of their roles and responsibilities.6. Is There a Comprehensive Contingency Plan in Place in Case of Emergency?
Finally, a business succession plan should also include some version of a business continuity plan/business contingency plan. Essentially, these are “break-in-case-of-emergency” plans that will ensure that the company is in the best position to navigate an emergency situation, such as the sudden death or disability of the business owner or a key decision-maker.Get Help From Our North Carolina Business Succession Planning Lawyer
At Arnold & Smith, PLLC, our North Carolina estate planning attorneys have the legal knowledge and real world experience to handle the full range of business succession planning issues. If you have any questions or concerns about starting the succession planning process, we are standing by, ready to help. Contact us right away for a strictly confidential case evaluation. With law offices in Charlotte, Union County, and the Lake Norman area, our firm provides business succession planning services throughout North Carolina.