Beth Botti photo

Beth A. Botti, CFP®, ChFC, CLU, CDFA™

Financial Consultant

California Insurance License #0G24537

 

612 Wheelers Farms Road, Milford, CT 06460

 

Phone:  203-877-6556 Ext. 169

Fax:      203-301-0736

Email: beth.botti@equitable.com

November/December 2024

Your Business Needs a Succession Plan

Asian elderly woman is retired. pensioner holds disposable coffee cup and clinks it with Asian daughter for promotional photo for coffee shop. The coffee shop is a family business with a happy smile.

Running a small business is not for everyone, but younger family members often want the challenge of taking over when founding generations retire. If you're part of a family business, here's how you can work toward continuing the business from one generation to the next, even in times of uncertainty like these.


Start with a Plan
Like everything else in business, you'll prepare best by creating and following a plan. A succession plan lists what events – death, disability or retirement – will trigger the next generation of leaders. It should also determine a valuation method – usually from a qualified valuation professional or certified public accountant – to determine the company's fair value.


Next, communicate frequently with your successors. You may have differences over how to run the business, and you'll need to resolve them—you can't run the business forever. You will want to create a development plan allowing family successor(s) to gain the necessary experience to run your concern. And you may want to begin making shared business decisions that allow your loved ones to get hands-on experience running the company.


Money Matters
While family members are learning all the tricks of your trade, create a buy-sell arrangement that works for everyone. Using the earlier valuation, detail how the next generation will buy into the business. Also, figure out appropriate compensation to leave a loved one who doesn't participate in the business to equalize your estate.


Your sale price and schedule of payments may be included in your buy-sell arrangement, and you'll also address tax responsibilities, the value of business assets, and total liabilities. You may also want to address potential liquidity issues to avoid future problems for both the seller and buyers. Pre-paying the transfer, whether through gradual ownership shares while working together, contributing to a sinking fund, or purchasing life insurance, might help address any liquidity issues.


Begin working toward an agreement as soon as you and your loved ones decide family succession is in everyone's interests, and review your succession plan regularly because change happens. Most importantly, work with qualified legal, tax, and financial professionals to develop a plan that benefits you, your family, and your business.

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Duly registered and licensed financial professionals offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc.). Equal Opportunity Employer - M/F/D/V. Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services. Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed. Your connection to this website does not necessarily indicate that the sender is able to transact business in your state. The information in this website is not investment or securities advice and does not constitute an offer. For more information about Equitable Advisors, LLC you may visit https://equitable.com/crs to review the firm's Relationship Summary for Retail Investors and General Conflicts of Interest Disclosure.

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CFP®, and CERTIFIED FINANCIAL PLANNER™ are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements.

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