Lets Talk Money Online - Making business succession work for you

Making any small business a success requires planning, hard work and, yes, luck. When your company's future after you depart is as important to you as running your business today, you'll need more than luck. Begin taking steps early to ensure that your company's success continues after you're no longer involved.

The successful transfer of your business can help provide you with your primary retirement income. Or it can provide a financial benefit for loved ones if you die or become disabled. Succession planning is about you and your loved one's financial security, but it may also be about your company's continued success. That's not surprising if your business is your life's work.

That's why plotting your company's future is about more than simply what you want, no matter who succeeds you. Your company's continued success will depend on the enthusiasm and expertise of your successor. That's where succession planning can help identify the right prospects to help ensure a successful transfer of your company.

To begin planning your succession, first describe your company in business and marketing plans. What does it do? Who does it serve? Where is its market and who are its customers? Who are your competitors? Do you compete on price, quality or a combination of the two? This gives your eventual successor a snapshot of your business, its products and your customers.

Outline the potential reasons for succession, such as death, disability, disagreement with partners and retirement.
If your successor is a family member, partner or key executive, work to make sure that person gains increasing responsibility and understands the nuances of your business.
Don't name an unwilling or unprepared successor. This can sound the death knell for your business. If necessary, recruit and train a talented individual(s) who is interested.
If you can't identify a successor now, outline eventual steps to find one and list the qualifications you would like to see.
Work with an attorney to draw up a succession agreement.

Do nothing, letting the new owners buy it with a down payment and installment payments. This can be risky because your eventual retirement nest egg may depend on the continued success of the business you no longer own.
Put money away periodically ahead of the eventual transfer if you plan to pass the business to a family member. This money could help fund redemption of the owner's share of the company, leaving the minority owner as sole owner. Understand, though, that this method also takes money away from other needs of the company.
Name your company or successor as the beneficiary of disability income insurance and life insurance policies on your life. This is a cost-effective way to fund succession if you become disabled or die. Talk to a tax professional to learn about any income and gift tax consequences of this arrangement.

Working with your tax and legal advisors, your licensed financial professional can help you develop a financial strategy designed to help fund the transfer of your business.

This is an advertisement prepared by LTM Publishing, Inc. for the use of the sender. The advertisement provided is not intended as legal or tax advice and may not be relied on for purposes of avoiding federal tax penalties. All individuals, including those involved in the estate planning process, are advised to meet with their tax and legal professionals. The individual sponsoring this newsletter will work with your tax and legal advisors to help select appropriate product solutions. We do not endorse or guarantee the content or services of any website mentioned in this newsletter. We encourage you to review the privacy policy of each website you visit. Limitations, restrictions and other rules and regulations apply to many of the financial and insurance products and concepts presented in this newsletter, and they may differ according to individual situations. The publisher does not assume liability for financial decisions based on the newsletter's contents. Great care has been taken to ensure the accuracy of the newsletter copy at press time; however, markets and tax information can change suddenly. Whole or partial reproduction of Let's Talk Money® without the written permission of the publisher is forbidden. ©LTM Publishing, Inc., 2009.

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