By Chesley Payne
Small business owners often spend a lifetime building a successful business.
However, they often overlook planning for what will happen after they are no longer able to operate their business. Small business owners often want to leave their business to their children or a trusted employee who wants to continue the business. Selling the business is always an option, yet, sometimes events will occur that do not allow the orderly transfer of a business. In this instance, a good business succession plan should be in place to allow for the transfer of the business to the new owner.
This can accomplished by the use of several documents, including a shareholder agreement, a will or other documents drafted specifically for a particular business.
Among the questions the small business owner should ask themselves include:
- Who will be the new owner?
- What will they pay for the business?
- How will they pay it?
- Who will they pay it to?
- What events will cause the transfer to occur?
Once these questions are answered, the small business owner, with the help of an attorney and accountant, should sit down and draft the documents required for an orderly and effective transfer of the business.
With these plans in place, a small business owner should be able to better prepare employees, spouse and children for the unexpected. This should also allow those people who rely on the income from the business to continue the operation of the business with minimum disruption.
The small business owner should look upon succession planning as an opportunity to reassess the viability of his or her business after they are gone and provide the resources necessary to continue the business successfully. Should you have any questions regarding your business, consult your attorney to obtain the information that best applies to your situation.