The legal, financial and tax consequences of that transaction can be enormous. Indeed, according to the Small Business Administration, 72 percent of businesses fail to survive the owner's departure. And, by far, the majority of those failures are caused by a failure to have a proper business succession plan in place.
We recommend that every business have two succession plans:
Crisis Succession Plan
Your business needs to have a plan to deal with unexpected emergencies. If you have an unexpected departure as a result of injury, illness or death, your business has to be able to survive your absence. This is the "emergency backup plan," in case your planned exit is prevented by unforeseen circumstances.
Orderly Exit Plan
Even if your exit is a long ways off, it is still a good idea to know when and how you plan to leave your business. And, it is never too soon to begin planning. As your planned exit date approaches, we work with you to make the changes necessary to ensure that your succession is smooth and successful. We help you minimize taxes, ensure that you leave the business with sufficient financial resources to support your future needs, and that the business survives your departure.
We recommend that business owners begin planning their exit at least five years before the anticipated departure date.