Some people love what they do. Our client, William, loves going to work. It was literally his life before he came to talk to us.
While it is great that he is passionate about his work, we all need balance in life. When one area of our lives is dominant, we can’t live life to its fullest potential, and the whole of our focus is placed on that one area, much to the neglect of many other important aspects, such as Succession Planning.
Succession Planning has been a key element to the future of William’s business. In the case of William wanting to sell or ‘exit out’ of his business, a well thought-out succession plan will ensure his business legacy, and make certain that he is well compensated for the business for which he has been working so hard. This involves appraising the business as well as examining and deciding who he trusts enough to take over his business once he is ready to move on to other endeavours or simply retire.
Although William’s Succession Plan will be relatively straight forward because he is the sole owner of his company, it is still very important that he have a plan in place in which to build upon going forward.
A proper plan would include a partnership agreement, including a buy/sell clause and succession upon the death of one of the partners. This can usually be facilitated by insurance policies on the lives of the partners.
William has often had ambitions to grow his company without exhausting his current financial and personal resources. The easiest way he thought to do this is by merging or even bringing on a financial partner for his business expansion plans. If he were to go forward with a move like this, his succession plan would suddenly involve partnership agreements.
These are just a few thoughts to take into consideration when planning a successful Succession Plan.
For a more detailed example of a Succession Plan, please read our case study Business Continuity Planning.
By Gino Scialdone, Black Spruce Financial
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