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Free Book: Business Succession Planning Checklist


Business Succession Planning Checklist

A Step by Step Guide

Business Succession Planning ChecklistThis checklist guide will walk you step by step through all the essential phases of constructing an effective succession plan.

Here's what's included:
* Elements of an Effective Plan
* How to Put all the Pieces Together
* Implementing a Plan to Pass the Business to the Next Generation
* Planning for the Sale of a Business
* Financial Considerations of a Succession Plan
* How to Make the Right Decisions
* And much much more.

Table of Contents
1. Elements of an Effective Plan
2. Putting the Pieces Together
3. Implementing a Plan to Pass the Business to the Next Generation
4. Planning for the Sale of a Business
5. Financial Considerations of a Succession Plan
Bonus Guide
6. How to Make the Right Decisions

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Sample Content:

Elements of an Effective Plan
What do you want to accomplish?
Is your small business a "hobby" or a "business?"
Time Frame
When to start your plan.
Knowing where you are in the small business life cycle.
Who is involved in the decision making?
Who will be affected?
"People support what they help create."
When will you know that you've made it?
Without a plan, you won't know where you're going or how to get there.

2. Putting the Pieces Together
Define Owner/Founder Goals and Business Goals
What do I want as my business grows?
Do I have a vision of the future?
Have I communicated the vision to others?
Analyze Your Business
Operation Policies
Financial Condition

Create an "Advisory Team" to Help Create/Sell/Implement the Plan
"Two Heads are Better than One -- Three Heads Improve the Vision."
Staff for Strength -- Marketing, Legal, Financial, Insurance.
Develop a Time Line with Key Steps
Keep focused on the ultimate goal -- the perpetuation of your business and personal financial security.
Determine If Owner/Founder Goals Differ from Business Goals
Does the business drive the owner or does the owner drive the business?
Analyze Owner/Founder's Personal Assets, Estate Plan, Life Mission
Do individual goals clash with family or business goals/needs?
Be Mindful of the Possible Outcomes of Your Plan

Who will be affected -- to what extent?
Family members.
When/How will You Communicate Your Plan?
Information minimizes confusions, distrust, uneasiness.
Examine Your Plan from a Strategic View
Create Measures to Evaluate/Provide Feedback
Should be:
Create Development Program So Successor Doesn't Begin "Cold Turkey" Passing the Reins
Have a transition period.
Mentor the new leader (s)
Answer Some Questions
Who am I?
What am I?
Why do I exist?

3. Implementing a Plan to Pass the Business to the Next Generation
Determine Goals/Objectives
Do you want to give up control?
Can you continue to manage daily operations?
Determine What is Best for You and the Business
Is it time to "pass the baton?"
Are you and/or your business being hurt by remaining on?
Examine Goals/Objectives of Family Members
Will they continue to wait for "their time?"
Avoid the Pitfalls
Family tensions.
Lack of personal financial security.
Selecting an inappropriate successor.
Setting up the successor to fail.
What to do When It's Time to Move On
Solicit objective input from advisors, family, business associates.
Set up criteria for successor.
Communicate decision to all parties.
Create clear agreement with successor to address steps, tome lines, financial considerations.
Begin relinquishment of control.
Set up program to mentor, train, educate successor.
Implement the financial agreement with the successor.
Turn business over to successor.
Create vehicle to allow you to "keep in touch."

4. Planning for the Sale of a Business
What are the Owner's Personal Goals
Consider retirement/using the business to provide security for the family, etc.
Key issue: how does the business fit within those goals?
Will the owner be able to will/gift the business to the family?
Is owner dependent business income for costs of living?
Does owner have resources to live independent of the business?
In Most Situations the Owner is Dependent on the Business
Owner must continue to work or it must be sold (cashed out).
Determining Accurate Business Value is Key
Once value is determined, compare to owners goals/needs.
Supplemental steps may need to be taken.
Steps to Take for Any Sale Plan
Determine and groom an appropriate successor.
"Sell" the plan to the appropriate parties.
Determine appropriate sales method:
Cross purchase (agreement between owners);
Redemption (agreement between owners/business);
"Wait and see, buy-sell (Buy-sell is in place but method determined at a later date).
Execute binding buy-sell agreement that can handle all contingencies:
lifetime sale;
sale at death;
sale in case of disability.
If Business Value Cannot Support Goals, Consider Alternatives
Remaining with the business, drawing salary beyond normal retirement.
Issues in this situation:
Will owner pass operations management over/continue to draw salary?
Will owner completely release control of business or interferes with daily operations?
Will management retain dollars for expansion/investment, while passive owner pulls cash from company?
What impact will this have on the business value?
Other Alternatives
Selling company/receive rental income from company land?
Reaching negotiated agreement/roles passive owner and management will play.
Selling the business through an installment sale.
Owner may draw during working years and invest to lessen dependence on the business value:
qualified plans;
non-qualified plans;
private pension plans (executive bonus);
split dollar arrangements;
non-qualified deferred compensation.

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