Business succession planning is the process where a
business owner plans for the business to continue as a viable entity in the
event of an adverse occurrence. This can
include any number of events, from the major shareholder requiring an exit, to a
director passing away. It is a form of
liability protection.
The following are some points for any business owner,
or prospective entrepreneur, to ponder.
1. If you knew that your time is up, and you will die,
what would you advise your family to do with your business? Can they take over and provide for themselves?
2. How would your business associates respond and
behave?
3. If, due to death or disability, you are unable to
continue, what is the likelihood that your creditors will demand immediate
payment from you or your family, or they would take legal action and seize your
assets?
4. What is the likelihood that your debtors will
decline to pay?
5. If you have any business or personal loans, what is
the likelihood that the bank will recall the loan, refinance it, or take legal
action to recover it?
6. Your estate requires money upon your death. How can they extract it without damaging the
cash flow of your business?
7. Even if there are sufficient funds, the executor
requires a court order to proceed to disburse your estate. Can your family wait all those months?
8. Considering the effort taken to build your
business, how would you feel if your inability to continue due to death or
illness leads to a fire sale? Can you
accept if your share of the business were sold for 30% of its value, for
example?
9. The day the owner dies, the business becomes
speculative in value. Do you want that
to happen to you?
10. Have you tried asking your family members to run
your business while you are on vacation or overseas? Are they able to step into your shoes?
11. Considering that you might be strapped for cash,
can you imagine without coverage and liability protection what the bank, the
court or your creditors will say?
12. If you are a minority shareholder, will your
position be protected after you are gone?
