As the world shut down in 2020, entrepreneurs lost control. No one can tell us when the next disaster will occur or whether it will happen in our lifetime. However, there is 100% certainty every business is confronted with some transition, also known as “Succession,” whether through a sale, gift, or death.
In the article, 4 Key Areas Every Business Owner Should Take Control Of, Jeff Bannon shares four key areas every business owner should take control of while they have the runway of time to do so:
1. Your Estate Plan
Those of you who have not put together an estate plan or reviewed it recently, rest assured that the government has one for you. The latest proposed estate tax law changes from President Biden suggest:
- A decrease in the estate tax exemption from $11.7m per person today to $3.5m
- An increase in the top estate tax rate from 40% to 45%
- Any appreciation in assets would be taxed at death regardless of whether the asset is sold
It’s unknown where the tax law changes will end up, but change is on the horizon.
2. Relationship with Your Franchisor or Manufacturer
The ability to continue the business beyond the current owner, whether a sale or transfer to family, will ultimately require the approval of your franchisor or manufacturer. Recognizing that franchisees/dealers and franchisors share continued success in the future, communication regarding succession is critical to staying in control of the plan. It is prudent to initiate dialogue with franchisors about the approval process and requirements of the successor owner. Particularly as it relates to the franchise agreement which may have terms that undermine a succession plan.
3. Relationship with Your Family
Misaligned expectations among family members are disastrous to any family business. In the absence of family communication, family members will naturally make assumptions that develop into unreasonable expectations. Whether it is salary, employment opportunities, ownership opportunities, advancement in the business, or estate distribution plans, the business often becomes the battleground for misaligned family members to wage their war.
4. Relationship with Your Management Team
In the absence of a communicated plan, it is common for talented key employees to consider other employment opportunities where their future has more perceived certainty. Taking control with the management team means controlling the narrative and reassuring the critical people that a strategy is being developed to protect all families dependent on the business’s ongoing performance.
There are many reasons business owners are motivated to put a succession plan together. The bottom line is that most business owners care about what happens and want to stay in control.
Click the following link to read the complete article on the Franchising.com website: 4 Key Areas Every Business Owner Should Take Control Of
Read the article and then reach out to us to get some insights into your own situation. A few moments with us will provide you insight and clarity for your next steps forward. Contact Us