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Name education, courses, training (joined 10-Apr-2021)
Username bzsuccessionplanning
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The Small Business Administration (SBA) and many state bankruptcy court service professionals urge that small business owners consider having a Family Business Succession Planning Counseling as part of their succession planning efforts. "A successful succession plan can be difficult to put together," admits David T. Bailey, Managing Attorney and Executive Vice President of The T. Box Company, in Pittsburgh, Pennsylvania. "It is even more complex to execute. But with the proper assistance, it makes sense." Many successful small businesses have a written business succession plan - a blueprint that guides all family members as they continue to operate the business to create a smooth and unified successor. Often this includes a written outline of the various roles that each family member will assume, including CEO, CFO, President, and LCO, or management director, or president and COO, respectively.

Small business succession planning often includes an outline of how company assets will be transferred during the death of an owner or during the transition of ownership from one person to another. This may include corporate laundries and assets, like trucks and cars, that are left behind by the deceased owner or former owner. In some cases, however, business succession plans do not include assets that have been inherited. It is important for family members to understand these situations, as well. In such cases, estate planning experts may be able to assist.

In many small businesses, the current owner continues to run the company after the death of the previous owner, assuming the role of "successor" or "successor owner." This could be problematic for a number of reasons. First, if the business does not experience a period of growth and profitability, there will likely be little left for the surviving heirs to live on. Second, the surviving family members may not have a significant amount of cash on hand and may be saddled with huge tax liabilities. Estate planning experts may be able to help.

Many business owners begin using business succession planning in their companies at the earliest stages possible, while the family members are still reasonably healthy and financially stable. By doing so, they give themselves peace of mind that the plan will actually be effective. Unfortunately, many family members are later to realize that this was never an option and that their decision to transfer the business, upon the passing of the previous owner, was not properly thought through.

When a business is purchased, many family members are not necessarily eager to see the business go. This can create problems when it comes time to carry out the succession plan. In many cases, the business valuation determines what happens next. Some family members may view the business as a possible cash cow and wish nothing more than to turn the management function over to their son or daughter, thereby assuming control of the business. Other heirs may prefer to keep the business but would like to see some improvements in the facilities or employee relations. An understanding of the business valuation can alleviate any concerns, these individuals may have.

Another possibility with business succession planning is for the younger employees to take on managerial duties or other supervisory roles. While it is not uncommon for young adults to lack managerial skills and develop the necessary skills early on, if left to their own devices, younger employees can quickly become frustrated with the inefficiency and clumsiness of the business. They may want to bring in new experienced hands to run the company, an idea that should be explored during family business succession planning. If a new hire is necessary, the best person to bring in is someone who can be trusted with young children and who has no desire to run the business as their father did.

Sometimes business owners will choose to sell the company before undergoing proper succession planning. Doing so can often result in the sale of the company at an unfair price, leaving behind empty pockets and still no clear direction in which to go. The best thing for a family business succession plan to do would be to avoid selling the company in its entirety and work with an independent broker to assist in the sale of a portion of the company. This allows both the family of the deceased owner and the buyer to split profits, retain management control of the company, and avoids paying exorbitant fees.

Anytime business succession planning is undertaken, it should include the wishes of the owner and their decision as to how they want their money to be used in the event of their death or illness. This is especially true if the wishes are shared and the business has a strong cash value. A well thought out family business valuation and succession plan can leave a long lasting impact on the business and the people who operate it.