If you own a business, you know that it can be challenging and rewarding. You take great pride in being able to provide your employees a place to earn a living and improve their lives, but what happens to your business if you are gone?
Endgame
What is your endgame? Do you plan on selling your business at retirement? Do you plan on passing it on to your kids or other business partners? Have you started planning that exit? Do you have an Operating Agreement that addresses both scenarios? Have you updated it recently? Do you have your company valued on a regular basis?
Untimely Disability or Death
No one likes to think about it, but what if something happens to you prematurely? Either disability or death could railroad your plans. If you don’t have certain measures in place within your Operating Agreement and methods to pay for these situations, such as Key Person Insurance or Income Replacement Insurance, you may have major gaps in your business continuity planning.
Business Partners
If something happens to your business partner, do you want to be in business with their spouse? Scary thought? Another issue that needs to be addressed in your business documents. Pre-determine what happens if you or your partner die prematurely and how the spouse’s share of the company will be handled. If your agreement has a “90 day window” to determine the buyout, you should get professional advice on predetermining value and the buyout method. Make it easy on your and your partner’s spouse! Forbes agrees in this article.
Other Considerations
Along with the above considerations, there are many other factors that need to be considered when evaluating your business documents! If you are a business owner, don’t just assume that it will work it self out! Having a solid team in place including a good CPA, Attorney and Fiduciary Financial Planner are key to evalutating your business structure.
You’ve spent many months and years building your company, don’t let a few hours of analysis prevent it from maximizing the lives you care about!
Here is a great article on tips for business owners!
Ryan Oates, MBA, CFPA
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