Business Succession Planning

Business owners often disregard the importance of succession planning. Exiting their business is inevitable for business owners, whether it is due to a divorce, illness, retirement, bankruptcy, liquidation, or death. The transition and continuation of the business will go smoother if there is a succession plan in place. Here are five important steps to take into consideration when developing a viable succession plan for your business.

  1. Establish goals and objectives: Develop a collective vision, goals, and objectives for the business taking into consideration all the parties involved: business owner, management personal and family. Establish the owner’s personal retirement goals and cash flow needs.
  2. Establish a decision making process: If family members are involved in the business, identify and establish governance process and a method for dispute resolution. Document the succession plan in writing and communicate it to all the parties involved.
  3. Establish the succession plan: Identify successors; consider family members, managers of the company, owners of the business, or outside professional management. Identify and define active and non-active roles for all family members, and identify any additional support from family members to the successor.
  4. Create a business owner estate plan: Define and address the tax implications to the owner/business upon sale, transfer of ownership, death or divorce. Look for ways to minimize taxes and avoid delays in transfer of stock to remaining owners, spouse, or family. Create a buy/sell agreement that reflects the accurate value of the business and minimizes taxes. Additionally, make sure to design the best strategy for a Retirement plan. If the business offers retirement benefits to the employees map out the process to provide a smooth transition.
  5. Create a transition plan: Consider all your options: Outright purchase, financing options, gift/bequest, or a combination of these. Establish a timeline for implementation of the succession plan.

Taking these five steps can help save you money and time, and most importantly may play a critical role in the continued success of your business. Additionally, at Protection Point Advisors we recommend consulting with a professional advisor to help with the process.


This information should not be considered tax or legal advice. Please see a qualified tax or legal professional for advice related to your individual situation.  


AllBusiness. “5 Steps To Create A Viable Succession Plan For Your Family Business.” Forbes. Forbes Magazine, 12 Oct. 2013. Web. 10 July 2017.

Cussen, Mark P. “How To Create A Business Succession Plan.” Investopedia. N.p., 03 June 2007. Web. 10 July 2017.

“Plan Your Exit | The U.S. Small Business Administration.” Small Business Administration. N.p., n.d. Web. 10 July 2017.

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