Small business owners in Florida should have a business succession plan to ensure that their business is well taken care of when they decide to retire. For those who are nearing retirement, there are some steps they can take to develop a successful plan.
One important part of creating a business succession plan is deciding on a successor. Successor options may include a certain family member, business assistant or business partner. Business owners should realize that if there are several people to choose from, it is likely that there may be some resentment by those who were passed over, no matter who is designated as successor.
Knowing exactly what the business is worth is another important factor of an efficient business succession plan. Obtaining the dollar value of the business can be achieved with an appraisal that is conducted by a certified public accountant. An amount can also be agreed upon by all of the parties involved. If part of the enterprise is made up of publicly traded stock shares, the valuation of the business interest attributed to the owner will be decided by the current market value of the stock.
Life insurance policies on all of the owners of the business should be obtained once the dollar value of the business has been determined. In situations in which partners die before terminating their business relationships with their other partners, the proceeds of their life insurance policies will be applied to the buyout amount of their shares of the business, which will be equally allocated among the surviving partners.
An attorney who offers business succession planning services may advise clients about which legal documents are necessary to execute their business succession plan. The attorney may assist with obtaining valuations of business assets and with negotiating terms for ownership transfers.