Business Continuation – Planning for Success, Part II

Onward to Part 2 of our discussion on Business Continuation.  Randall Blinn is our author this week as he was for Part 1.  Randall is a professional financial consultant with Asset Strategies Group in Austin, TX.  Most insurance agencies are small to medium sized businesses and need to have an established plan for the new leadership taking the helm.  The tax, estate, and financial laws and rules can be confusing and complex.  You should seek counsel in each area.  Look at this like a chess match, you versus the governement.  Keep in mind that the government is betting that you are not going to take the proper steps to secure your estate and legacy for the next generation.  Because if you don’t, Uncle Sam gets more from you.  So please take the steps necessary to plan for specific scenarios before they happen.

Develop a Business Plan for the Future.  You should outline clear-cut short-, medium-, and long-term goals for your successor, along with an action plan for achieving them.  The business plan should include budgets and financial forecasts that can adapt to changing conditions in both the industry and the economy.

Choose a Transfer Strategy.  Depending on the type of business, its value, and your personal financial situation and goals, you’ll need to determine the best transfer strategy for your business.  There are a variety of ways to structure and fund buy-sell agreements.  For transfers to family members or charity, gifting may be a viable option.  Consult your tax and legal professionals for specific guidance.

Plan for Contingencies.  Regardless of your ultimate intentions for succession, it is wise to have an updated package of basic information on hand in case an emergency, such as death or disability, should occur before you have finalized your succession plan.  This should include the following:

  • A copy of your current business plan.
  • Updated job descriptions of all positions within the company, including details regarding areas of responsibility and delegation of duties.
  • A list of potential successors.
  • A plan to help ensure extensive hands-on training for your designated successor.
  • An estate plan to help ensure the availability of cash to help fulfill federal and state estate tax obligations.

Other Consideratations

 There are a number of financial, legal, and tax issues that a thorough succession plan will need to take into account.  For instance, how will a successor secure funds to buy out a retiring, deceased, or disabled owner’s share of the business?  What are the estate planning issue?  And, how can an owner minimize gift taxes resulting from the transfer of company stock to family members?  Answers to these and other questions can be addressed n a succession plan, which is often the result of a coordinated effort by qualified legal, tax, financial, and insurance professionals.

A Parting Thought

You owe it to yourself to ensure that you business will continue to flourish after your retirement, as well as in the event of death or disability.  Proper planning can help provide long-term security for your retirement, your company’s future, and your family.

Thank you Randall for the in-depth article on this deep and complex subject.  If you are interested in learning more, you may reach Mr. Blinn at rblinn@finsvcs.com.  Or you can stop by his online office at www.randallblinn.com.  – villageChief


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