If you own your own business and are considering a business succession plan, there are five questions you should address with your Financial Advisor.
What other assets have you set aside to help fund your retirement?
Should you rely on your business alone to fund retirement? Just as your investments should be diversified, so should your assets.
As a business owner, you should save and build your retirement savings plan away from the business to work toward your retirement goals.
Have you considered whether your business is an asset you can sell?
Whether or not you can find a buyer for your business depends on many factors. Are there employees or partners who could continue to run the business after you retire? Will your business attract outside buyers?
For example, companies that produce tangible goods and have positive cash flows can often be sold. On the other hand, specialty firms that rely on you and your skills alone are generally not salable. Most businesses fall somewhere in between.
If you were to sell your business and pay the taxes on your gains, would the proceeds be enough to last for the rest of your life?
It’s important to determine if you expect a similar level of income in retirement that you now enjoy from your business..
What happens if you cannot be involved in running your business?
If more than one partner is involved in your business, it is important to have a buy-sell agreement in place. This is a written agreement between two or more owners of a business.
If a triggering event occurs,such as death, divorce or disability of a partner, one or more owners will have the right or obligation to buy the business interest from the owner who is obligated to sell.
Do you have a plan in place that will allow you to retire regardless of a sale?
Planning for succession in a small business should be a top priority.
Begin with the objectives you want to achieve, and talk through these concerns with your Financial Advisor. Together you can build a plan