May 05, 2015
4 Tips to Planning for Next Generation
Hard work, dedication, and long hours went into the creation of your business—and now it's your turn to continue building on the foundations laid for you. Benjamin Franklin and Winston Churchill are both credited with the thought, "If you fail to plan, you plan to fail." When it comes to taking over your business, this could not be more true.
Just as someone planned for you, you can start setting up the one who will follow you for success. Strategic planning may not eliminate all uncertainty, especially when dealing with your finances. As you begin developing your succession plan, keep these tips in mind:
- Ask the Experts — Knowledge is power, and there are a variety of people who can offer assistance as you establish your plan. For example, a valuation expert can help you understand the true financial worth of your business, or an estate planning attorney can manage your assets over the years of your ownership. The specialized insight of these professionals will aid you in making educated decisions today to ensure your financial security in the future.
- Keep Records — Hopefully your forerunners have been thorough in documenting all financial information. Having access to your business's history regarding costs, transactions, donations, etc. will give you a good representation of your financial position when it comes time to pass the baton. Continue the practice of proper recordkeeping, as it may provide necessary information for cost-saving opportunities down the road.
- Taxes — They're not going away, but they do vary depending on the structure of your business. Taxes differ from LLCs to C Corporations to S Corporations, and it's important to know the implications that will affect you directly. Having a life insurance policy and making charitable donations are two ways to lessen the tax burden you will bear as you transition out of ownership. Hiring an expert to help you navigate these decisions is worth it—the amount they can help you save is far greater than the cost of their services.
- Stay Focused on the Vision — You will most likely have a close relationship with the one you're giving ownership. Spend some time having transparent discussion about your purpose and vision for the business as well as their goals for the future. While the transition in leadership won't be perfectly smooth, you must decide the best option for your particular business. Consider creating a paid position that would allow you to stay involved for a few years, or choose to hand over the business gradually through a series of reduced-amount shares. Whatever the method, let it be centered on open communication and honest intentions.
Planning doesn't guarantee success, but it can provide a solid platform as you take the plunge. While it may seem early to begin this process, have confidence in knowing that you'll be prepared when the time comes to give someone else the opportunity to lead.
Helping you create a better tomorrow, today—because at John Deere, We're For Loggers.