More than Money with Gene Dickison Answers:
“I am half owner of a nine year old business. My partner is a close friend and we pretty much share all the responsibilities of running the company. We’ve built a company we’re both very proud to own. Neither her husband nor my wife are involved in the business – nor would they want to be. We want to put a plan in place to protect the business in the event something happens to one of us. Where do we start?”
It depends . . . on whether you have a business worth protecting?
Some businesses are simply jobs with the word owner attached. In order for a business to have real value, it must have assets (consistent positive cash flow, hard assets, real estate, contracts, patents, goodwill, brand value, etc.) that a third party would be willing to acquire with real money.
So . . . you should start with a business valuation. A professional business valuation will look at all the aspects of your business – profits/losses; balance sheet of assets and liabilities; growth rates; and much more to determine what value is appropriate. If you need a referral for a professional business valuation please feel free to contact me.
Once a value is established the next step will be crafting a business succession document. This document will outline the mechanisms for protecting the business in the event a partner dies, becomes disables, retires, or wishes to leave the business. A well crafted document will be completely fair to each of you.
With a documented strategy in place your financial advisor can help you plan funding strategies to cover each of these contingencies.
Valuation, documentation, and funding – the three key components to an effective business continuation and succession plan.
Do you own a business?
Do you have a plan in place to allow the business to continue without you?