Last week (May 12-16) was National Small Business Week. Every year since 1963 the President of the United States has issued a proclamation announcing National Small Business Week, which recognizes the contributions of America’s entrepreneurs and small business owners.
Are you interested in what happens to all your hard work, effort and energy that you have put into your business? An article written by Lisa Honey, ‘Where There Is a Will, There Is the Way to an Enduring Small Business’, shares information about estate planning for business owners. In the article, she mentions that some of the challenges faced by business owners can be addressed if action is taken before it is too late:
- Estate Plan – A will can provide a roadmap for what you want to happen to your business upon your death. The will must be coordinated with other parts of your estate plan to ensure that the provisions of your will are still applicable. For example, is your business incorporated? The legal structure of your business can make a difference in what options are available to have your business continue to operate after you are gone. Other estate planning documents can address taxation issues upon a sale, transfer of ownership or stock.
- Business Plan – A buy/sell agreement can aid in the continuation of the business as it provides the terms of a sell or purchase by co-owners. The agreement can address the methods for selling and buying shares of stock by other stakeholders as well as other particulars.
- Succession Plan – This is your opportunity to chose your successor – who can run the business once you are gone? It can be a family member in many instances depending on the type and size of your business. Also, develop a formal training plan for the successor so they are familiar with the critical functions of your business. Set up a timetable for the training and get the process moving so that your successor can move into the position without much delay. Next, make plans for your retirement if you are no longer going to work or be involved in the company. Make sure a support system is in place for your successor to help ensure their success.
- Transition Plan – All aspects of the business must be considered when devising a transition plan. How will the files be transferred? How will customers be notified of the new changes to the company? How to prevent service disruptions to clients? How will staff changes affect the operation? These are just a few of the intricacies involved in a transition plan. Much time and consideration must be given to all the possibilities when such a transition occurs.
As mentioned above, a will is just one part of estate planning for a small business owner. Other very important documents, agreements, and plans should also be in place. If these items are not working in concert, then the desires and wishes of a small business owner may be in jeopardy. You know how hard you have worked to operate your business, so do your best to ensure that it continues and endures.