A Business Plan for Your Small Business After You are Gone

It’s not something we like to think about, but as a business owner, it is imperative that you plan for the day when you are no longer there to run your business. Do you want your business to continue on, or to close its doors forever? What will happen to your clients? Your employees? Your family?  Planning your business’s future today will save those people that depend on you and your business a tremendous amount of heartache later.

Here are some simple (and not so simple) tasks you need to do in order to make the transition easier:

1. Get your business valued. This is important because if the business has to be sold, you’ll need to know what it’s worth. There are companies that specialize in this, and many times your CPA may offer this service. 
2. Get life insurance in place to provide the company with sufficient cash should you die.  Many times, if there is no key employee ready to take over for you, the business may need cash reserves to continue operating, or to hire someone in the interim to keep things running. Life insurance is a cost effective way to provide a lump sum when it’s needed the most. Having life insurance on key employees is also a prudent planning technique. 
3. Identify your replacement. If you become disabled or die; who will take over? Is there an employee that shows potential? If not, start looking for that candidate today. Another option would be to consider taking on a partner. Chances are, if you’re thinking about succession planning, there are other business owners having the same thoughts. Attending association meetings and networking with other businesses in your field will provide a good starting point to finding that potential partner.
4. Have a buy/sell agreement. Agreeing on a formula for valuing the business in advance will save you time, money and potential litigation from business partners and/or family members.
5. Get disability insurance. Many times you won’t want to pay the premiums for this type of plan, but having it in place should the need arise will insure continuity of operations in a tragic situation.
6. Integrate your business succession plans with your estate plan. If family members are taking over the business, are you selling or gifting shares over to the next generation? Integrating these planning goals is vital if you want to mitigate taxes. Time and proper planning could save thousands or even millions of dollars.
7. Communicate your plans. Making sure your family, employees and professional advisors all know your intentions with respect to succession and/or disability will prevent a lot of problems in the future. If everyone is on the same page and in agreement, an already stressful situation will be easier to endure. Annual or regular updates should be a part of your business plan.  
8. Have a contingency plan. Plan for the worst case scenario and you’ll always be prepared for the unexpected. 

The author of this article is the co-owner of Independent Financial Services in Land O’ Lakes. With over 100 years of combined experience among its dedicated staff, Independent Financial Services provides a variety of financial services to its clients, including comprehensive financial planning, ongoing active money management and investment management. The all-women firm specializes in four key areas: women and investing, retirement planning, divorce planning and small business solutions. Visit www.independentfinancialservices.net for more information.

Due to regulatory constraints, we are unable to accept online comments on this article. However, if you have any questions or would like to discuss issues brought up in this article, feel free to call or email Jodi directly at  jodi.perez@investmentcenters.com or (813) 908-2701.

Investment Centers of America, Inc. (ICA), member FINRA/SIPC and a Registered Investment Advisor, is not affiliated with First National Bank of Pasco or Independent Financial Services. Securities, advisory services and insurance products offered through ICA, and affiliated insurance agencies are *not insured by the FDIC or any other Federal Government agency *not a deposit or other obligation of, or guaranteed by any bank or their affiliates *subject to risks including the possible loss of principal amount invested.