Succession Planning

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Business succession planning is an important part of operating a business especially for small – business owners and owners who are near to retirement. By making business succession arrangements early, owners help make a smooth transaction and minimize any negative effects of any departure from their company.

Continuing the Business

The first point to consider in business succession planning is whether the company will continue to operate after the owner departs. Some business owners choose to simply liquidate the assets and close the business when they are no longer involved, while others wish for the company to continue. One of the most important decisions in business succession planning is choosing a successor.

Choosing a successor

A successor is chosen by appointing a family member, employee or other individuals to take the owners place. Designating a successor in advance will help simplify the transition and set appropriate expectations. In addition, by providing guidance for continued operations and the future leadership of the business, employees can feel secure in their jobs.

Managing Debt

Many business owners have basic loans or credits that help them operate their companies. What many people may not realize is that, upon a business owner’s death or severe disability, lending institutions have the right to call in the debt and force repayments of the loans. A business succession plan takes outstanding debt and fines of credit into account and provides information on how to manage the debt repayment. Particular funds or assets can be selected to repay loans and should be indicated in the Business plan.