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Building and protecting your wealth

The Importance of Succession Planning

Have you adequately prepared yourself, your family, and your business for the future? If you own a small business – be it a family business or another closely held enterprise – it can be a demanding job. But don’t let running your business now get in the way of planning for what comes next, make sure you’ve addressed your succession plan.

This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. 

If you own a business, perhaps a practice, property portfolio or other business, it makes sense that you would want to ensure your company ends up in the right hands. If it is a family business, you’ll likely want to pass it on to another family member. Or if you’re planning to sell you want to make sure whoever buys your business has the same vision for your business that you do.

Succession planning ensures that transferring ownership from yourself to someone else is a seamless process so the new owner can pick up right where you left off in the pursuit of your company’s goals.

The importance of succession planning

For many people, their business is their legacy. Without a succession plan, you’re putting your legacy at risk. Not only that, but a succession plan will help ensure that the new management team, employees, and stakeholders will all be on the same page when the time comes.

You have a few different options when it comes to succession planning, the three most common are: keeping your business in the family, pursuing a management buyout, or selling the business.

Keeping the business in your family

If it is a family business and you’d like for it to stay that way, then you’ll have to decide who to pass the company on to. If you have family members that work with you already, that might make the decision easier. If you don’t and you still want to pass on your business to a family member, it could become complicated, so it’s best to involve an impartial financial adviser.

Management buyout (MBO)

If you’d like to keep your business in the hands of those who currently help run it – the management team – then it’s possible they could pool their funds together and purchase the company. This is a great way to ensure business continuity. There would be no disruption to your business’s growth and nothing to prevent your company from achieving its goals ad the same team would still be in place to service your customers.

Selling the business

It might be a difficult decision to sell your business, and even tougher to find the right buyer. You want to find someone with the skill and expertise to run your business once you’re no longer in charge. With the right new owner, selling your business might just be the right option so you remain profitable but ensure the success of your company’s future all the same.

The keys to successful succession planning

Each succession plan will be unique to your business, but a good plan will involve the following elements: goal setting, timeline planning, and seeking financial advice.

Goal setting – Think about your personal goals as well as your goals for your business. If you have shareholders or other stakeholders to consider, you’ll have to get their feedback too.

Timeline planning – Usually, your succession plan is designed to kick in when you retire. It helps to have a set date to work towards, but you should also consider planning for an unexpected death before you retire.

Seeking professional advice – Creating a succession plan isn’t something you’ll need to revisit often, once you’ve planned it, you’ll have no reason to worry about it until your retirement. Do it once and do it right with the help of a financial adviser.

If you need help building a succession plan for your business, get in touch to schedule some time with us.

Do you have your succession plans in place?
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Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

Tel: 01403 780 770


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