According to the National Association of Women Business Owners, women-owned businesses are on the rise. In fact, more than 9.1 million firms in the U.S. are owned by women. Moreover, one in five firms with revenue of $1 million or more is woman-owned.
Being a successful business owner often means having to wear many hats and oversee a variety of areas, such as human resources, finance, operations, marketing, sales, and customer service. And if you’re the CEO/President of a small business, you’re even more hands-on than those who lead larger operations. With so much drive and focus on what’s happening today, it’s understandable why many business owners put future concerns and challenges to the back-burner. However, our experience as financial advisors has shown there’s one very important concern that all successful business owners should never postpone: the creation of a strong Succession Plan.
Whether you are a sole proprietor or in business with multiple partners, it’s critical to have a succession plan in place. In the event something happens — whether it be death, disability, retirement, or even divorce — to you or one of your partners, how would it impact the operations of your business, or the services you provide to clients or customers? There are three essential elements to any successful transition in business: (1) advanced planning, (2) good communication, and (3) periodic review.
By planning in advance before an actual emergency occurs, you will help maintain the value of your business and ensure that your company continues to operate smoothly for both customers and staff. Of course, we understand your reluctance. After all, it’s not easy to stop and think about the “what if’s” in life that could negatively impact you. But by not considering those what if’s in advance, you may resort to hasty, emotional decision-making that could result in poor choices, and, more importantly, unfair compensation for the business you worked so hard to build.
Just as crafting a living will is important to communicate your personal health care choices, so too is a written plan for your business. By taking the time to address your succession and communicating it to key individuals within your organization, as well as with family members, you are eliminating any confusion as to your final wishes. You will create a sense of security for any unexpected event.
Lastly, it’s critical to periodically review your succession plan to make sure it still meets your needs. We recommend at least an annual review to ensure there are no changes in your personal and/or professional situation that could affect your plan.
If you don’t already have a succession plan or you haven’t reviewed it recently, we encourage you to take action now to avoid unnecessary confusion in the future. Consult your financial advisor to get a professional opinion.
We understand no one likes to think about the worst-case scenario. But you can save yourself, and those close to you, considerable amounts of anguish, confusion, and perhaps even financial distress down the road by being proactive.
McKinley Carter’s financial advisors are always available to assist with succession planning. We can offer best practices and industry insights that will enhance your plan. Call today and get started on securing your financial future.