There are many good reasons for estate planning—ideally sooner rather than later. Ensuring your heirs are taken care of, for starters, or passing down your philanthropic wishes, are all goals you can accomplish with a comprehensive and effective estate plan. But your estate plan can also preserve your wealth and secure your legacy in another way: extending the lifespan of your business.
Why Combine Business and Estate Planning?
You’ve worked hard to build your business from scratch. You take pride in being a local Tennessee business that serves your community, or maybe you’re now standing at the helm of a Nashville-headquartered enterprise corporation that creates jobs across America. What will happen to it when you can’t run it anymore? Adding business succession planning strategies to your estate plan answers this question.
Financial and estate planning for business owners must incorporate business succession in the event that you are no longer able to lead your business—and not just because you have retired or passed away. Business succession planning also ensures a steady hand to lead your company in the event that a medical incident incapacitates you or property division issues surrounding a divorce require you to divest from your leadership position.
How to Ensure a Smooth Transition of Power with Business Estate Planning
You can’t always accurately predict when you’ll have to step down from leading your business—so being proactive and ensuring you have a clear line of succession now sets your organization up to continue operating smoothly and achieving its strategic goals without skipping a beat, no matter when you make your exit or under what circumstances.
Using strategies such as these in your business succession plan can ensure your business and your ambitions outlive you:
Make Business Succession Planning a Priority—Now
Don’t wait until the last minute to choose a successor. If you wait until it’s time to leave your leadership position—especially if that time catches you off-guard—it will be difficult, if not impossible, for your business to avoid disruptions in its operations. This chaotic transition can lead to you missing short-term opportunities for growth or falling into market pitfalls you otherwise might have steered clear of. In short—your ability to choose a successor at your leisure determines your business’s financial stability during the transition period!
Identify Your Business’s Current Situation
Above all, your business succession plan needs to reflect your and your business’s circumstances at the time you create it—just in case you end up needing it sooner than you think. Take stock of your business’s current health and the opportunities and challenges you foresee in the near future and the far future. Taking a good, hard, honest look at your business—where it came from, where it’s heading, and what needs to be done to bring it there—ensures that you make your decision of who should step into your shoes when you slip them off with your feet firmly planted in reality.
Define Your Ideal Replacement
When you step back from the business succession plan you’ve created, you need to feel confident that you’ve picked the best successor you could find—a new leader who is prepared to steward your company and its guiding values and sail your ship into a changing world. The ideal leader has ample experience in your industry and a finger on its pulse. They are committed to your company’s mission, culture, and ethical stances. They have the imagination to set long-term goals and chart a course to achieve them.
You’ll want a successor with:
- The ability to inspire, motivate, and guide your organization as you have.
- Strong financial acumen and deep understanding of your business, market trends, and customer needs.
- A proven track record of making sound, strategic decisions under pressure.
- Adaptability and resilience in the face of both foreseen and unforeseen challenges and disruptions.
Involve the Whole Company—Not Just Key Stakeholders
Obviously, your business’s key stakeholders, such as board members, the rest of your C-suite peers, and department heads, need to be looped into your business succession planning strategies. Anyone who would be affected by the transition needs to be aware of how you intend to step down when your time comes to minimize disruptions.
But it doesn’t stop there—the rank and file benefit from being kept in the loop, too. Implemented correctly, your succession plan doesn’t just grant you peace of mind about your business’s future—it makes things easier on your employees as well. In fact, knowing that you’re proactive about succession shows your employees that upward mobility in your company is in the cards, encouraging them to look toward career advancement and ownership opportunities in the future and feel greater satisfaction with their choice of employer.
Keep Your Plans Up-to-Date
Times change—and you can’t always depend on a business succession plan you made years ago to hold up a decade from now. The people you’ve been grooming to succeed you might decide to take their careers on a different path. Mergers, acquisitions, or shifting economic headwinds or tailwinds might radically shift your business’s strategic goals.
An out-of-date business succession plan, like an out-of-date estate plan, can be just as bad or worse than no plan at all. After all, the purpose of business and estate planning is to minimize chaos, and a plan that doesn’t fit your current circumstances won’t accomplish that—and could even create more! Whenever your personal financial circumstances, your estate considerations, and your business’s circumstances change, you should consult with experts to revise and update your plan.
To find out more about how you can fit business succession planning into your estate and wealth preservation strategies, dive deeper with our free digital resource, “Wealth Protection and Peace of Mind: A Comprehensive Guide to Estate Planning for Business Owners and Family Providers.”
Download Our Free Business and Estate Planning eBook Now
Plan Your Business Legacy With Tennessee’s Estate Law Experts
Whether you’ve founded a thriving small business in your local community or helmed an enterprise corporation that touches millions of lives beyond the Volunteer State’s borders, you need an effective plan for when it’s time to step down and hand the reins to the next generation. The best time to start thinking about business legacy planning is as soon as possible—the next best time is right now.
MHPS Law has helped business owners of all types across Tennessee ensure their businesses continue to grow and thrive well after they’ve retired to enjoy their golden years or passed on. We know our way around best practices for succession planning in companies of all shapes and sizes.
Let’s work together to build a business succession plan that fits perfectly with your wishes for your grander estate plan—and ensures that your business’s successful streak lasts well beyond your lifetime. Don’t wait until you’re ready to step down—start planning and achieve peace of mind today.
To get started, reach out to our legal team for a consultation today.
