Entrepreneurship inspires new business openings every day. Small business owners may not consider succession planning when starting their new business. However, it is an essential step in any venture. Small businesses become a part of the community and make an impact beyond the owner’s livelihood. They add jobs, contribute to the community’s economic health, and become local fixtures for residents.
Based on Teamshares’ article, “Succession planning statistics in 2024: preserving a legacy,'' we're discussing the looming succession plan dilemma, why it’s essential, and what it means for your business. As many small business owners without a succession plan set their sights on retirement in the next two years, those employees and their communities may lose wages and a business they love.
Succession planning is ideally on every small business owner’s checklist, leaving a legacy in a family member’s hands once the owner retires. Owners should have a plan ahead of retirement if they become incapacitated or pass away unexpectedly. Succession planning is elemental for small business owners, much like estate planning is for anyone with assets.
Teamshares’ statistics indicate that over 60% of small business owners will retire between 2024 and 2026. Without a plan for family or someone else to lead the company once they retire, the company will likely close. You might be asking, “Why is that important?”
Small businesses employ nearly half of America’s workforce and contribute to local economies. With most owners retiring without a succession plan, chances are many of those companies will close across the U.S. in the next two years. Not having a succession plan for retirement or, in case of incapacity, could unwittingly be the catalyst for closing your company.
Your company is built on hard work, entrepreneurship, and a dream. Having a successor running your business, if you retire or are unable, passes a legacy to family or someone you trust.
Work with an estate or business planning attorney to create a plan that protects you, any employees, your family’s livelihood, and your community. Like an estate plan, legal documents, such as living trusts, can keep your company open and pass on your legacy.
Establish a living trust, appointing a trustee or co-trustees to handle company operations and run the business. Draft financial and medical powers of attorney, empowering trusted agents to manage bill and invoice payments and bank transactions, employee payroll, and oversee your healthcare, if you are mentally or physically impaired.
Whether you’re creating an exit strategy, empowering family members to take over, or preserving the company’s livelihood in a crisis, a succession plan protects you, your family, and your community from your company closing. Losses include income, employee wages, and resident patronage. Consider a succession plan to empower a successor who will keep your business running.
If you own a business and want to set up a complete and comprehensive estate plan, we can help! Contact The Werner Law Firm living trust lawyers for a free consultation.
If you have any questions, schedule a free appointment with us through our online appointment page.
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Reference: Teamshares (Dec 22, 2023) “Succession planning statistics in 2024: preserving a legacy”
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