Family businesses in the U.S. account for 50% of the gross domestic product. These businesses are a major contributor to the economy given the role that they play in employment and job creation. However, most owners find it hard to ensure the succession of their company when they leave.
Creating a succession plan for your business in Salt Lake City requires careful planning. A will attorney from Day Shell & Liljenquist, L.C. stresses that without a plan, the future of your business will be at stake. To ensure continuity in your company, consider these tips:
Identify Potential Owners
A will attorney will help you put your business in the hands of a secure family member. According to statistics on American family-owned businesses, less than a third of these businesses are expected to survive after a transition from the first to the second generation. One of the most common causes of failure is family bullies taking over the business at the expense of those who can run it successfully. With a will in place, you can avoid messy transitions.
Value the Business
You’ve spent your entire life building your business, and when you’re about to leave, it’s important to value it. Valuation will help you decide the right figure for selling your business or the percentages to distribute among family members. Knowing these figures will also help when dealing with complex issues such as taxation.
Maintain Critical Employees
A succession plan will help retain key employees and maintain its value during the transition. While a new owner might have new ideas and new employees to bring to the company, dismissing employees who are critical to the operations might lower the business value, bring about lawsuits, or even quality issues.
Whether you’re planning to sell your business or leave it with your family, having a succession plan will help to smoothen the transition process.