When you start a family business in Louisiana, you want it to last. But few businesses make it into the second or third generations. Only 30% of companies have a business succession plan in place for when their founder or leader passes. Making a business succession plan is one of the soundest tasks you can do to keep your business living on after you.
When should you start your planning?
Experts recommend you start working on a succession plan at least 10-15 years before you retire. This is time to cover any tragedies, such as an unexpected death, that might happen before you are ready. Look at your business and your heirs: Are they currently expanding their involvement in the family business to be ready for a change? Do you have any employees who are ready to step into ownership roles? You want to make certain that people who will lead the company in the future are moving into those roles now. Review the plan every three to five years as things change.
What should you be planning for?
Talk with both an estate planning attorney and your accountant when you make your business succession plan. Some things to talk about include:
- Making an Employee Stock Ownership Plan to ease key employees into ownership
- Setting up mentoring programs
- Hosting a family meeting to get everyone’s input
- Bringing in key players to give input on the plan
- Selling the business if no one wants to or will be ready to take over
- Purchasing insurance
- Looking at the tax results of the choices you make
Having a succession plan is a necessity if you own a family business. Do this earlier than you think you need in order to plan for emergencies. Bring your family, your attorney, your accountant and any key employees in on the plan to safeguard the future success of your company.