So you are bullet proof. You are a self-made man or woman and your business is flourishing. You put in the many necessary hours to build your business and may have family involved to assist you. You have used your own skills and expertise to be a leader in your field of endeavour. You control your own destiny – or so you think...
Thinking Ahead
Consider where you wish to be in the next ten to twenty years. For example, when do you want to retire? Will you be able to realise sufficient capital from your business to generate an income, which will in turn enable you to spend the later years of your life doing the things you were not able to whilst running your business? Succession planning is all about addressing these issues and putting things in place to avoid problems in the future. It will pay dividends later if you take the time to plan ahead now.
The Elements Of A Succession Plan
As a first step, you need to consider how to structure your business so that it offers the greatest protection to you, your family and any others you may wish to provide for. This may involve the formation of companies and/or trusts as vehicles to own and operate the business and its assets. Your lawyer and accountant will be able to provide advice on the most appropriate structure for your business and how to achieve your goals while assisting with the implementation of your succession plan.
Your health is an important factor to consider. You need to plan for the eventuality of illness, which may prevent you from working full time or even part time. If your business cannot function effectively without you then you will need insurance to bridge the gap.
In the event you are overseas or otherwise unable to make important strategic and operative decisions for the business someone will need to be appointed to make these decisions on your behalf. In the event of your death, you will need to consider the most appropriate person to assume control of your business. Both of these eventualities may be covered by a business plan, power of attorney and/or a will.
If you have family members involved in your business, the tricky question then arises as to how best the interests of those family members who are involved can be balanced against those who are not. Once decisions have been made then they should be recorded in your will. If you have a family trust, then a memorandum recording your wishes should be prepared.
It's never too early
Remember, it is never too early to begin planning succession issues.