Want to leave a lasting legacy? Don’t delay succession planning

(BPT) – By Kevin Bearley, Next Gen business strategist at Pinion, formerly KCoe IsomYou’ve worked hard to build your business, pouring your heart and soul into its success. You’ve had to tackle complex problems and sometimes make tough decisions. It’s not always clear which choices are best when running a business, but there is one thing you know for sure: thoughtful planning always pays off.The same is true when it comes to the legacy of your business.Whether you are a few years or a few decades away from stepping down, it’s essential to plan ahead. You want to leave your business on your terms and achieve the outcomes you desire, which is why succession planning shouldn’t be delayed. A formal exit strategy ensures your wishes are followed, whether that be family transfer, sale, employee buyout or another path.You may have thought about succession planning, but because you’re busy, you’ve put it off or simply don’t know where to begin. You are not alone. More than 70% of business owners fail to put a strategic, written plan into place.The truth is no one knows when the day will come that they can no longer run their business. Delaying the critical task of succession planning typically leaves the burden to the family, who may be unprepared and therefore make uninformed decisions that impact the business and your legacy. Essentially, if you fail to plan, you plan to fail.At Pinion, we have seen firsthand the costly damage caused by lack of planning, including undervaluing assets, misappropriating funds and excessive tax implications. These are all examples of costly financial implications, but what can be even more devastating can’t be boiled down to a number, such as when brand reputations are damaged, employee relations are diminished and family trust is destroyed.Succession planning is primarily for when you plan to exit the business, but it can be an important legal tool at any time. One of the most memorable moments of my career was advocating for a $30 million family business serving as an expert witness in a case stopping the former son-in-law from taking a large share of family assets. The judge ruled in favor of the family because of the particularly clear terms in the succession-plan strategy the family created.Planning now mattersWhen is the right time to plan? It’s never too early. We recommend no less than five years in order to properly designate, determine and develop a successor under your governance. Wondering where to begin? The process starts with a few discovery questions:Who will be your successor?How much is your business worth?How much do you need to retire?When do you hope to transition?What’s next for you?These questions will help form the foundation of your succession plan. To help guide you, consider the following components of any solid exit strategy: 1. Succession: The first step should include a path of discovery, which defines your vision for the business and the legacy you want to leave. This defines what will happen to the business that you’ve given so much to develop. It identifies future leadership and determines the progression, communication with family and goals for every step of the journey. 2. Transition: A transition plan defines important components of timing and includes steps implemented in a strategic manner to reach your long-term goals. A succession plan consultant provides expert insight into planning in regard to financial benefits, maximizing assets and minimizing risks and all other considerations surrounding the future sale, purchase or transition of the business. 3. Estate: A good estate plan includes business and personal financial strategies that optimize inheritance, gifting and entity structures while decreasing tax burden and protecting assets. It involves setting up plans that will complement legacy and transition strategies through the increase of wealth. 4. Legacy: Lastly, the legacy plan is the development and deployment of your long-term goals. How do you envision life after departure from the business? Furthermore, how can you protect this vision from the unexpected? This includes the accumulation and management of wealth, as well as meeting your retirement lifestyle goals, and accounting for life’s uncertainties and risks. Pinion Next Generation planning isn’t just about the transition, it’s about enriching your legacy. For additional insight visit PinionGlobal.com.