Business Succession Planning
Succession planning protects the sustainability of a business, as well as its stakeholders’ financial prosperity. It is important to develop a formal exit strategy before your business requires one. There are a variety of risks associated with a lack of succession planning. From organizational disruption to economic consequences, businesses that do not pre-plan for structural change will falter.
Your Succession Plan:
- Should be a formal, pre-planned process
- Start several months in advance of a departure
- Consider trends that may affect financial stability & operations
- How will changes in leadership affect employees & clients?
- How will economic trends influence the future of the business?
- Will the business continue to thrive using the current structure or do products/services need to change?
- Be forward-thinking
- Consider how to develop employees for future roles
- Evaluate the role of resources and assets during and after succession
- Objectively decide whether the business should continue operations
Consequences of Poor Succession Planning:
- Reduced shareholder confidence
- A lack of planning leaves room for uncertainty
- Shareholders may revoke their support if they feel as though the company will flounder after the departure of a key figurehead
- Employee Challenges
- When a structural change is poorly planned, employees may not know who to report to
- Without a clear plan during transitions, staff members have reduced accountability and motivation
- Interruption in Operations
- Training employees in new roles may interrupt normal work flow
- Disruptions and changes to normal work flow may delay projects and client services
- Accounts payable and receivables may not be maintained, resulting in late payments and deficits
- Clients may experience reductions in service quality or service delays
- Excessive taxation
- Poorly planned asset & share management will result in both the business owner and their successors overpaying on taxes
- Finances may be depleted so much so that the company cannot continue to function and/or the predecessor’s financial security is lost
- Any combination of these consequences may force a company out of business
- The leader departing the business may be forced into personal bankruptcy
Professional Succession Planning
Hogg, Shain & Scheck offers professional succession planning services for your business including:
- Value your business
- Determines financial health of the enterprise
- Asset management
- How will assets be divided?
- Will they be sold or gifted?
- What are the financial and tax ramifications for both the business and the person leaving?
- Assessing risks and opportunities to create a successful and sustainable succession strategy
- Clearly articulating risks based on factual evidence before the leadership team makes irreversible decisions
Managing & Protecting Cash Flows
- Maintain sufficient liquidity to pay the taxes due when ownership is transitioned
- Protect cash flow at a time of increased operational demands to prevent bottlenecks and deficits
- Prioritize the needs of the company over the biases of internal parties
- Objectivity mitigates potential turmoil and promotes a healthy work environment, protecting the integrity of the succession strategy
- Displaces the responsibility of making difficult decisions onto an external party
- If you want to sell, dismantle or pass on your business, we will use the most tax-efficient strategies (/tax-services/) to secure your success
- We properly handle asset transfer to avoid significant income loss
- Our firm pursues tax-effective ownership transfer
- We structure the capital gain of asset or share sales so that the person leaving and his family will not be burdened with excessive taxes
- Our taxation strategies save shareholders extensive personal tax and generate more after-tax income that can be re-distributed into the business or used for personal gain
Personal Financial Planning
- If you are leaving the company, we make sure that your personal prosperity is a priority throughout the financial planning process
- Manage personal taxation
- Properly invest & grow assets
Until now, your enterprise has succeeded because of your hard work and dedication. Formal succession planning will increase the return on investment for your years as a committed entrepreneur.
You can never be sure when you will need a succession planning strategy: start planning now to protect your personal and business assets. Collaborate with our team of accountants to make your succession vision viable. Contact our team and together we will develop a succession plan that realizes all of your financial goals.