succession planning - Linkenheimer LLP CPAs & Advisors

Advisory Spotlight: The Importance of Succession Planning in a Business’s Future

In the fast-paced world of business, having a succession plan is not just a good practice; it’s a necessity. As business owners, departure is certain be it through retirement, sale, or unexpected events. This demands proactive planning to ensure the continuity and stability of your business. Succession planning is the process of identifying and developing new leaders to replace old leaders when they leave, retire, or pass away. Here’s why it’s essential for your business.

Ensuring Business Continuity

Succession planning is vital for maintaining the continuity of your business operations. A well-crafted succession plan ensures that the transition of leadership is smooth and that the business remains stable. This is particularly crucial for small to medium-sized businesses where the departure of a key role can significantly disrupt operations.

Without a succession plan, businesses may face operational downtime, loss of direction, and even financial instability. By planning ahead, you can mitigate these risks, ensuring that the business continues to thrive regardless of changes in leadership.

Preparation for Unexpected Events

One of the key benefits of succession planning is its role in preparing for unexpected events such as the sudden death or disability of key personnel. These unforeseen events […]

By Linkenheimer LLP|2024-09-27T16:53:22+00:00September 27th, 2024|Advisor, succession planning|0 Comments

Timelines: 3 Ways Business Owners Should Look at Succession Planning

Business owners are rightly urged to develop succession plans so their companies will pass on to the next generation, or another iteration of ownership, in a manner that best ensures continued success.

Ideally, the succession plan you develop for your company will play out over a long period that allows everyone plenty of time to adjust to the changes involved. But, as many business owners learned during the pandemic, life comes at you fast. That’s why succession planning should best be viewed from three separate but parallel timelines:

1. Long term. If you have many years to work with, use this gift of time to identify one or more talented individuals who share your values and have the aptitude to successfully run the company. This is especially important for keeping a family-owned business in the family.

As soon as you’ve identified a successor, and that person is ready, you can begin mentoring the […]

By Linkenheimer LLP|2024-05-30T19:52:08+00:00May 30th, 2024|business, succession planning|0 Comments

Family Business Owners Must Weave Together Succession And Estate Planning

It’s been estimated that there are roughly 5 million family-owned businesses in the United States. Annually, these companies make substantial contributions to both employment figures and the gross domestic product. If you own a family business, one important issue to address is how to best weave together your succession plan with your estate plan.

Rise to the challenge

Transferring ownership of a family business is often difficult because of the distinction between ownership and management succession. From an estate planning perspective, transferring assets to the younger generation as early as possible allows you to remove future appreciation from your estate, minimizing any estate taxes. However, you may not be ready to hand over control of your business or you may feel that your children aren’t yet ready to run the company.

There are various ways to address this quandary. You could set up a family limited partnership, transfer nonvoting stock to heirs or establish an employee stock ownership plan.

By Linkenheimer LLP|2020-12-15T18:05:53+00:00December 15th, 2020|succession planning|0 Comments

What Lenders Look for in a Succession Plan

Business owners are urged to create succession plans for the good of their families and their employees. But there’s someone else who holds a key interest in the longevity of your company: Your lender.

If you want to maintain a clear path to acquiring the working capital your business may need after you’ve stepped down, it’s important to keep your lender apprised of your progress in putting a carefully considered succession plan in place.

A viable successor

One key operational issue that lenders look for in a succession plan to address is, simply, who will lead the enterprise after you? For family-owned businesses, finding a successor can be difficult. Children or other relatives may be qualified but have no interest in taking the reins. Or they may want to be involved but have insufficient experience.

To reassure your lender about issues such as these, take the time to identify and nurture future leaders. […]

By Linkenheimer LLP|2020-09-03T20:03:22+00:00January 13th, 2020|succession planning|0 Comments

Putting Together the Succession Planning and Retirement Planning Puzzle

Everyone needs to plan for retirement. But as a business owner, you face a distinctive challenge in that you must save for your golden years while also creating, updating and eventually executing a succession plan. This is no easy task, but you can put the puzzle pieces together by answering some fundamental questions:

When do I want to retire? This may be the most important question regarding your succession plan, because it’s at this time that your successor will take over. Think about a date by which you’ll be ready to let go and will have the financial resources to support yourself for your post-retirement life expectancy.

How much will I need to retire? To maintain your current lifestyle, you’ll likely need a substantial percentage of your current annual income. You may initially receive an influx of cash from perhaps either the sale of your company or a payout from […]

By Linkenheimer LLP|2020-09-03T20:03:40+00:00September 11th, 2019|retirement, succession planning|0 Comments