As the economy in the U.S. continues to improve, baby boomers who are preparing to retire are creating a surge in the sale of small businesses. According to the Huffington Post, small business sales during the first quarter this year jumped over 50 percent as compared to 2012. Retirement is reported to be the number one contributor to the jump.
Across Indiana, baby boomers are retiring in droves and are doing so in a variety of ways. Some stride into retirement easily, and some kicking and screaming. Either way, it is important to have a plan that lays out how your company or business will continue or close. Following are some important tips to keep in mind:
- Start setting up a succession plan early. Not all business owners have the luxury of retiring exactly when they want to. A sudden illness or family situation may drastically alter your life plans without warning. Establishing how the business will continue - or dissolve - before the unexpected happens can make everyone's lives easier.
- Have a defined plan with options. Although you may discuss your succession plans with your board of directors or co-owners, formalize the details, laying out various options that can work within a variety of situations. You can always revise the plan later if you desire.
- Distinguish leadership from ownership. It may not always be in your best interests to assume that a family member or cherished employee will be ready, willing and able to run the business as well as you. If you own a family-run business, understand that some family members do not work well together and may destroy what you - and your family - have built over the generations. A succession plan may allow your heirs to continue as the owners but, maybe, someone with more business savvy should be calling the shots.
- Do not make assumptions. It is not always easy to sell the business when the end draws nigh. As the economy changes over the years, so do the real estate and business climates. Likewise, do not assume that a buyer or a successor will suddenly appear just when you want or need one.
Business succession planning does not mean an "all or nothing" situation. You can continue to maintain control of the business while slowly cutting back on your hours or delegating responsibilities as your successors as they grow into their expanding roles. It is your call.
An attorney can help
As you establish your business succession plan, consult an experienced business and corporate law attorney. There are often legal issues that come into play and a lawyer knowledgeable about family-owned business matters, estate planning and resolutions for corporate and business disputes can help.