Making Sure Your Business is Secure
Vital to any small business long-term security, succession planning enables you to manage the transition of your business to future owners and management. One of the first things any business owner needs to consider is how to protect against events that may threaten the future of the business, like the death of a proprietor, partner or key employee. To preserve the value you have created, it’s important to plan for the orderly transition of ownership.
Protect Your Family
Many small business owners take out loans secured with personal assets to start or grow their business. If the business owner passes away before these loans are paid off, the family may have to sell or liquidate the business to pay the debts associated with the business. When a family is forced to sell the business quickly and market conditions are not ideal, they often have to sell at a discount. The loss of the business owner can have a significant effect on the value of the business as well.
Obtaining an individual life insurance policy can protect your family in this situation by providing funds to cover debts, ongoing living expenses, and future plans in the event that something happens to you.
Protect Your Future
In many cases, your business represents one of the largest and most important assets that you own. Consequently, developing a succession plan or exit strategy is a key planning issue facing you and your business. A well-structured succession plan protects you, your family and your employees.
An exit strategy prepares you to leave your business, whether it happens during life or at death. Your exit strategy should focus on four key areas:
- Estate Planning: Coordinating your retirement and succession plans into your overall estate plan
- Retirement Planning: Establishing a plan and reviewing it regularly
- Succession Planning: Protecting your business investment
- Business Valuation: Obtaining an accurate business appraisal or valuation
Protect Your Partners
If you die, does your family have the skill and time to step in and run the business? The fact is, your loved ones may not have the background or the desire for the job, and your co-owners may not welcome the idea of an unintended partner.
If you wish to sell your portion of the business or plan ahead for an unintentional event, consider establishing a buy-sell agreement funded with life insurance. A buy-sell agreement is an arrangement between owners to buy out an owner’s share of the business in the event of disability or death. Buy-sell agreements are typically funded by a life insurance benefit sufficient to buy out the partners’ share, thus providing financial security for the surviving family. The amount is usually specified in a contract created with the help of an attorney.
Opportunities, Rewards and Responsibilities
Not many business owners want to think about the time when they will have to hand over control of their company to someone else. For most business owners, their time is spent on running their business and keeping it successful.
We will help you gain a better understanding of how proper insurance planning can help protect your business and family, improve recruitment and retention, and provide you with creative ways to reward employees.
Don't let your dreams fade. Contact us today for a consultation.
Together we'll chart a path to your future.