As entrepreneurs, we dream of creating something that will outlast us and continue across generations. Perhaps we envision our children carrying on the mantle of the family business or a storefront bearing our name long into the future. Whatever the reason, our genuine desire is for our legacy to outlive us.
If you are one of these dreamers, here are five steps you can take now to ensure that happens:
- Create a Succession and Continuity Plan: Whether you intend to sell your business, pass it on to a family member, or hire outside management, creating a succession and continuity plan is crucial to ensuring your business’s future. It’s essential to prepare a draft of this plan early in the lifecycle of your business then revisit it regularly to make sure you stay on track.
- Take a “Big Picture” Look at Your Finances: Has your business been accurately appraised within the last few years? Are you diversifying your wealth? Will your assets ultimately go to whom you would like, in the manner you would like them to, with the flexibility you desire? Hiring a financial planning firm can help you answer these tough questions and ensure your business finances are in shape. The more prepared you are, the less likely you’ll leave unwanted surprises for your family or business successor.
- Prepare for the Things You Hope Won’t Happen: While starting a business requires a certain amount of optimism, protecting your legacy requires considering how your successors could inhibit your business’ prospects for long-term success. That’s why your business agreements should contain detailed and specific instructions on how to handle life events such as individual financial troubles, divorce, litigation, or drug/alcohol addiction. While you can’t always protect your loved ones from their demons, you can mitigate the effect they can have on your business.
- Consider Your Cash Flow Needs: A good financial planning firm should be able to help you assess your post-retirement cash flow needs. Understanding your individual and family financial needs after you transition out of business ownership can stack the odds in favor of a successful and stress-free future.
- Choose the Right Business Successor: Choosing your business successor is perhaps the most crucial step in preserving your business legacy and the one that requires the most soul searching. Whether you select a family member, a top employee, or a candidate from outside the business, you need to choose someone whose vision, values, and business sense matches (or even outmatches) your own. When your successor mirrors your approach, your dream of a business that lasts for generations is more likely to come to fruition.
It’s easy to begin your journey to comprehensive personal wealth planning. Just click here to schedule a no-obligation conversation with Obsidian Planning Solutions today. We’ll help you set the right goals, create a solid plan and start moving toward the professional legacy of your dreams.