It may seem counterintuitive to plan for business succession when a company is just getting off the ground, but experts recommend it. So when busy Illinois entrepreneurs start setting things in order for their opening days, thinking through who will take over the business some day is just as important as planning who will get it started.
The U.S. Small Business Administration has recommendations for this process, including the kinds of questions company founders should ask. Because, according to the SBA, profitable companies are easier to sell, it is imperative to set the business up for success from the start. Owners should question how they will maintain the financial strength of their organization through the years so that when it comes time to turn it over to others, it will continue to thrive.
The SBA also encourages deciding early on who will get the reins passed on to them and how current leadership will prepare the new owners for the transition. Will they buy the company outright or will they need assistance financing the transaction? The answer to this question could have a significant impact on who takes over.
Another relevant question is whether it will it be “a family member or trusted employee.” Again, answering this – preferably early in the business planning process – will help smooth the transition later.
Fidelity Investments also encourages planning an exit strategy that is “tax-friendly.” One way to do this well is to “work with a team of trusted professionals.” Fidelity suggests including an estate planning attorney, financial advisor and CPA on the team.