We've all heard of having a will in place, but what about having a will for your business? Here, we discuss the importance of succession planning for your business.
Having a valid, up-to-date will allows you to have a plan in place for your family in the case of death. It’s something that we’re all aware of, and a large percentage of us will have taken the steps to put a will into place, or at least thought about doing so. Unfortunately, death is a certainty for all of us, so it’s important to plan ahead to ensure your assets are left to beneficiaries of your choice. If not, business partners, lawyers, state government and banks could be the ones enjoying your years of hard work.
What you may not have considered, is the importance of having a will in place for your businesses; more commonly referred to as succession planning.
What is success planning?
Business succession planning is a formal process which enables business owners to develop preferred exit options, whilst they are still in a position of control.
How do you see yourself leaving your business? There are generally two events that you should consider; planned exits and unplanned exits. Planned exists typically include retirement, , or even a mutual agreement between business partners to part ways. Unplanned exits include terminal illnesses that prevent you from continuing to run the business, or worse, death. Building a succession plan ensures you are prepared for both of these possibilities and gives you and your business partners certainty of the potential outcomes.
According to KPMG
, only 21% of Australian businesses have a formal succession plan in place. This means there are a huge number of business that don’t have a plan for the culmination of years of hard work or, if an unfortunate event occurs.
Business succession plan typically includes:
- Different exit strategies
- Trigger events, that would result in you or your business partners exiting the business
- A strategy how this exit would look like
- A strategy to take on new business partners
When it comes to planning for the unexpected, there are two choices. The discomfort of putting a plan in place and discussing terminal illness and death, or the regret of wishing or your family wishing that you took the steps to create a succession plan. Whilst discomfort is temporary, regret is permanent. Make today the day you start the conversation around succession planning and enjoy peace of mind that your family have a secure financial future. Our team of financial planners
are here to make the process as comfortable as possible for you.
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