Why Is Business Succession Planning So Important?
The reality is that ALL privately-owned companies eventually change hands. It’s just a matter of how and when. Having a succession plan in place significantly protects and increases the value of your business. Business succession planning is often overlooked because business owners are busy working in their business and not working on their business.
So what exactly is business succession planning?
As part of your overall business and personal goals, business succession planning should address and plan for three areas.
- Maximizing the value of your business – Often, your closely held business is your most valuable asset and business succession planning is a wealth driver for that asset. Similar to getting your house ready to put on the market, preparing your business for a transition and “getting the house in order” can drive significant value upon liquidity.
- Ensuring you are prepared – You are only going to do this once so you want to make sure that you are prepared from all perspectives and can financially accomplish all of your lifestyle goals.
- Ensuring you have planned for life post transition – Multiple studies have shown that post transaction many business owners have seller’s remorse. Often times the business has been their identity and their life’s work and difficult for them to transition to what is next.
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