WHY YOU NEED A PLAN
A good succession plan will help make the transfer of your business go smoothly and allow you to maintain good relationships with employees and business partners.
Succession planning helps you:
- Protect the legacy of your business.
- Maintain a service for your community.
- Build value for your business.
- Provide financial security for your family and your stakeholders.
- Deal with unexpected events (illness, accident, or death).
- Prepare for the future.
OBSTACLES TO PLANNING
There are two main reasons why you may not have a succession plan:
- You haven't thought about (or don't want to think about) important matters like retiring or, even worse, dying.
- You have no idea how to develop a succession plan.
No one likes to think about leaving the business they have nurtured and raised like a child and which has now become successful. Some common thoughts:
- You feel like you are abandoning a family member.
- You have unfinished projects to do.
- No one is smart enough or will work harder to run the business than you.
- It is generating too much cash to give up.
- You have a different vision for the business than others.
- Current economic conditions do not make it the right time.
- You can't imagine dying or retiring.
A lot of the reasons people do not create succession plans are personal in nature. But the business is usually one of the most valuable assets you own—if not the most valuable asset—so why not protect it like you would protect your own family members?
If you own a business, the succession plan should be included as part of your overall comprehensive financial plan. Protect your business and your legacy by building one today.
For more information on business succession planning, read our other article: When should I start developing my Business Succession Plan?
Tom Zaks is a seasoned portfolio manager and wealth advisor, a former business TV commentator, an experienced university lecturer, and the author of three wealth management books tailored to Canadian business owners. The above is an excerpt from his most recent book, The Business Owner’s Guide to Tax and Succession Planning.