Succession Planning: Do you have a plan B?
As a business owner, have you ever considered what would happen to the business if you had to take a break due to serious illness or injury?
Would the business survive? How would the bills get paid? And while you may not like to think about it, in the case of death, how can you ensure your family is given a fair deal in the case of a business partnership? This is not about a lack of trust, it is about putting measures in place so everyone’s best interests are planned for and taken into account. It is important for all business owners to have a detailed succession plan. A succession plan is like a will, but for a business and with a wider range of scenarios and options to consider.
Just like your will, a good business succession plan will vary from one business to the next. There are some key areas however that must be be considered however a full succession plan is a detailed plan that requires quite specific advice. Contact us or book an appointment to discuss a succession plan for your business and circumstances.
In the event of death or retirement, the ownership and control of the business may need to be transferred to the owner’s family or to the surviving business partners. How easily this occurs will often depend on how the business operates, such as through a trust, or a company, or without a separate entity at all.
When you are in a partnership, you need to consider the possibility that you could end up in business with a spouse or inheriting family member unless a succession plan specifies otherwise. If something happened to one of the business partners, would their spouse or children take over the control of that share of the business? A succession agreement can assist the other business partners to continue business operations whilst allowing for compensation for the former partner’s family.
Just like personal insurance, business insurance can provide a range of protection such as temporarily meeting the normal costs of running the business (business expenses cover) or paying for a short-term replacement manager (eg. trauma or disability cover). A life insurance policy linked to the succession agreement that provides the deceased partner’s family with suitable compensation for the transfer of business ownership to the surviving partners may also be a good idea. Income protection insurance can also be beneficial in order to cover the cost of your replacement in the event of trauma, illness or injury that prevents you from working. We work closely with insurers to help you establish policies that best suit your needs.
Powers of Attorney
Most small businesses struggle to do much without the advice and authority of the figurehead or key decision-maker. A Power of Attorney is integral to a good succession plan in order to keep the business going and give you time to implement your succession plan if a business owner is unable to fill the role.
We work with you to create a succession plan, connecting you with trusted insurers and legal advisors.
A succession plan should be reviewed and updated periodically as your business grows or even as it is winding down. This would consider the value of the business, the required insurance policy values and potential changes to partnerships, family members and beneficiaries of wills.
Need a succession plan?
We have extensive experience and understanding of succession planning and the importance it plays in business.
We’re here to help you run a successful business and protect your assets, now and in the future.