Planning for your Long Island Small Business
The Critical Importance of Planning for your Small Business
Building a business is hard work. From the initial planning stages, to execution, to the day-to-day management of the business, there is a lot to do. With so many pressing obligations, it’s no wonder that estate and succession planning are usually the last things considered by business owners.
But, as a business owner, your business is probably one of the largest and most important assets you have. Protecting it, yourself, and your family must be made as much a priority as the day-to-day management. In order to properly protect your future, it is critical that you have a business succession plan.
Just like in your personal life, as the owner of a business, you need to plan for what will happen when/if you become temporarily or permanently incapacitated or disabled, retire, die or sell the business so that your business will continue despite such an event. You may want the business to survive with whoever you choose receiving the value of your ownership interest. Likewise, if your business has multiple owners and you depart, for whatever reason, the remaining owner(s) usually will want to retain ownership and control and may not want to be in business with your creditors, surviving spouse and/or heirs. If you are temporarily or permanently incapacitated or disabled or die unexpectedly the consequences for your business could be detrimental, from an upheaval in day-to-day operations, to an uproar between people trying to control the business in your absence. This all leads to loss of business profits or the business completely. With a plan, your business will be run by who you want, according to your wishes.
Incapacity Planning for Business Owners
Most business owners have their estate planning prepared because they are worried about what will happen to their business after they are dead. However, proper estate planning has the added benefit of allowing you to make plans for what will happen if you are incapacitated or needing to be away from your business for an extended period of time.
As the owner, you are responsible for the day-to-day operations of your business. This is a full-time responsibility. But what will happen if you can’t be there all the time? You don’t necessarily have to be in a coma to be unable to participate in your business. You could be on an extended vacation or have a medical diagnosis that requires you to take several months away for treatment or recovery. During this time, your business needs to continue on so that you and your employees can continue to take home money.
It is important to think ahead about who will be in charge of the day-to-day operations because a ship without a captain can be dangerous. Not only does this individual need to understand the business, he or she needs to have the respect of your employees, and be confident in making tough decisions in your absence. Without this planning, everyone could jump to the conclusion that he or she is in charge, or alternatively, no one will step up, resulting in chaos either way.
If you have family members working in your business it is also important to explain to them what will happen in your absence and who will be in charge so that someone does not assume they are in charge just because they are family. Importantly, remember that just because your family is involved with your business does not mean that he or she is the best choice to succeed you.