A large corporation may be able to survive in the absence of a succession plan, but if you own a small business in Michigan, we at Molosky & Co. believe that you need a solid succession plan in place. The lack of a plan may lead to the destruction of everything you have worked to build after you leave the company, whether voluntarily or due to death or another unavoidable circumstance.
According to FindLaw, choosing a successor is an important part of the plan, especially for a family business, but it is only a first step. Before handing over the proverbial reins, you need to ensure that your successor is well trained and competent to take over the ownership duties. This could involve working under your tutelage for a series of months or even years.
Another matter that needs your consideration is your financial strategy. If you plan to retire after transferring your business, you still need money to live on. Although selling your share in the company is one option, there are other choices available that allow you to continue to receive income from regular payments for a period of time after the sale, sometimes for the rest of your life. These options include private annuities, self-canceling installment notes and granter retained annuity trusts.
In planning your succession, you should strive to make the transition as smooth as you can for your successor, but do not forget about yourself. It may be difficult to walk away from a concern that you have worked so hard on for so long, even when you know that it will be in good hands. Your planning process should also include what you want to do with your retirement and how you can achieve your intention. More information about business succession is available on our website