Small businesses are the backbone of America with over 28 million small business owners in the country. Unfortunately, many small businesses without a good succession plan fail in the attempt to transfer ownership. If you’re a small business owner hoping to transfer ownership to someone else, you need to have a solid plan for succession. This article will explain how to start planning your small business succession in order to have a successful transfer.
The best first step when planning your small business succession is to sit down with your lawyer and accountant. Planning early is always smart. Your accountant and lawyer will help you with the earliest stages of your plan, from who your successor will be to all the financial preparations.
The first step in a succession plan is choosing your successor. Many small businesses choose to keep ownership in the family. When choosing a successor, whether he or she is in the family or not, you must choose someone with a passion for the business. It’s never too early to choose and start grooming a successor. The most successful business transitions start with a successor that has been trained for several years.
All of your employees will need to be prepared for the transition of ownership. Develop a timeframe for the succession and include your key employees in it. They may need to have a role in the transition to make it go as smoothly as possible. Remember that theses transitions don’t happen over night.
You will need to make sure all of your finances are in order before giving your business over to someone else. Make sure the equity in your business is included in the price your sell it for. The Small Business Association has a loan program that is helpful in business successions. It can help the qualified buyer finance their purchase over the span of 10 years. Your successor may also need to purchase the building your business is in, upgrade equipment and maintain a line of credit. Whatever your financial process, a small business lawyer can help you make sure everything goes smoothly.
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