A successful business started with a plan for formation, and it endured because of a plan filled with achievable goals and strategies. Don’t let your business falter in the face of tragedy when an owner, shareholder or director dies suddenly. Create a strategy for your company’s future through a business succession plan.
Having a succession plan in place is highly recommended. An unforeseen accident, illness, divorce, or even retirement may leave your business without a leader, and it is at that time that your business will need a clear direction. Companies of all sizes should have a succession plan in place to help avoid internal disputes as well as potential failure. For a small business owner or entrepreneur, who built the business from the ground up, you want to know your business is going to succeed without any hiccups, and a solid succession plan is just one of the ways to help ensure your company’s success.
Succession Plans with Shigo Law Firm
Our attorneys have the expertise needed to create sustainable succession plans for your Gainesville or Ocala business. One of the main purposes of a succession plan is to ensure a smooth transition. Therefore, your plan should outline clear goals for the company. We often recommend that business owners consult the directors, shareholders or family members who are integral to the daily operations of the business in order to set a goal that can be agreed upon and achieved.
Succession plans can help reduce the stress during a time of the unexpected. These plans provide clear paths for action and usually name a successor. By doing so, you can eliminate a lengthy process of finding a successor without a leader in place, and the business can move forward. This also provides employees with a sense of reassurance as they will see that the company will not immediately dissolve into ruin.
Retention Business Succession Planning
As the head of the company, you may hope that a “business as usual” approach is sustainable. If you want your company to stay in business with a similar business model as the current one, then a retention plan is needed. You’ll need to decide who in your business will take over, or which family members will lead the company and retain control of the assets.
Buy-Sell Retention Planning for Business Succession
The buy-sell retention approach is common as it plans for specific employees or shareholders to obtain a larger stake in the business. These individuals may accept the shares but they also have the ability to refuse the shares and responsibility. If that happens, the shares can be offered to people outside of the business. It’s important to consider a buy-sell succession plan at the onset of your business formation to help avoid serious issues when the time comes to sell your business.
Shigo Law Firm can also help you determine whether or not to specify if shares or assets should be transferred or divided. There are a lot of options when it comes to business succession, and we can help you choose which ones will fit your company for sustainability.
What Happens if You Don’t Have a Plan?
When a company that has no succession plan loses its leader, the leader’s stake passes on to the estate, is absorbed by remaining shareholders or a combination of both. But, the absence of a plan can open the door to family disputes and internal disputes which can take years to resolve. In that time, the company may suffer from negative publicity or the uncertainty of a successor.
Family-owned businesses without a succession plan often fall victim to inner-family disagreements. Relatives may disagree on a successor, how to divide assets and shares, or even on the direction the company should take. There can also be disputes between shareholders and the family of the previous owner which can become litigious.
Shareholders aren’t the only group who will be uncertain during this time. Employees may fear for their jobs, choosing to quit before rounds of layoffs or having to endure the uncertainty of whether the company will succeed. It can be difficult to find a new leader for your company, but nearly impossible to lead while training half the workforce.
It is never too early to put a business succession plan into place. We advise our clients who are interested in business formation to also consider a succession plan. It can be much easier to create a plan at the start of a business than at the end where people may feel entitled to be named a successor or to receive large shares of the company. Business succession plans allow your shareholders, employees and family a peace of mind in a time often filled with grief or uncertainty. Let Shigo Law Firm guide you through the business succession process so that you can meet state and federal regulations and allow your company to succeed in your absence.