HOW TO DEVELOP A BUSINESS SUCCESSION PLAN
Whether you are talking about a business in the Northeast Kingdom or nationwide, the median age of small business owners is getting older. It is estimated that more than 50 percent of small business owners in the country are 50 and older, and that means that within the next decade, many of these individuals will be thinking about what they want to do with their business once they retire.
There are a number of options for business owners thinking of selling a business, including:
- Transferring the company to children or relatives.
- Selling the business to employees within the company.
- Having a third party purchase the business.
- Selling the company as part of a public offering or other exit strategy.
Planning is key when considering such a life change, and there are resources and professionals at the ready to assist you in this transition, including lawyers, tax accountants, appraisers, life insurance agents, bank trust officers and financial planners. All of these resources can be found in the Northeast Kingdom Chamber business directory.
Talking with these professionals will help you decide how you want to structure your exit from your business, but they will also provide you with some needed strategies on how to survive the succession of your company to a family member or to a new owner. These professionals are necessary so that the cycle of businesses going out of operation is broken, as only 35 percent of family businesses survive the first generation of ownership and only 20 percent make it to the third generation.
These skilled professionals will help you determine what are the strengths, weaknesses, opportunities and threats relative to your operation, so there are no surprises when you sell your business. These professionals will also assist you in developing projected revenues, earnings, expenses and net worth for your business going forward, not to mention a timetable or schedule for succession.
There are a number of online succession planning resources that can help you when the time comes to develop such an exit plan:
- SCORE’s Developing a Succession Plan.
- Small Business Administration’s Plan Your Exit.
- The IRS’s Closing a Business, which includes a Closing a Business Checklist.
FOR MORE INFORMATION ON THE NORTHEAST KINGDOM:
Northeast Kingdom Chamber of Commerce
2000 Memorial Drive-Ste. 11
St. Johnsbury, VT 05819
The Northeast Kingdom Online Business Resource Guide is meant as a resource for those seeking to start, expand, relocate or transition a business. Please contact the Northeast Kingdom Chamber for permission to use or distribute this content. A PDF format of this guide is available to businesses upon request. Thank you.