If you own a business, chances are that the day is coming when you will want to stop working and start enjoying retirement. What will happen to your company when this day arrives? The success of your company is dependent on how well you have prepared your successor to take over. While the current state of the economy begs for your attention, time and energy, it is important to start thinking about the future today.

The Next Generation

Only a small percentage of family-owned businesses are successful in the second generation. Start talking with family members now about their personal and professional goals. The time to explore who wants to stick with the family business is now, rather than later. Open conversation is the key to finding and preparing a successor. The current state of the economy is turbulent, and you may find that family members who were once interested and reliable are no longer willing or able to take on such a responsibility.

Tax Considerations

There are complicated tax issues associated with businesses when they change hands. If you intend to keep your business in the family, you can simplify the tax issues by making annual gifts to family members. Annual gifts to family members are a good way to slowly lower the value of your business, which simultaneously lowers your taxes. Because you will be gifting the assets to family members, they can continue to assume additional responsibilities in preparation for succession.

Selling Your Business

If your intent is not to leave your business in the hands of a family member, but to sell it to a successor, then you might want to take advantage of this money-saving tip: sell your business stocks to your successor and have them cover the fees associated with financing this transaction. This approach will save you both time and money.

A well-defined succession plan is necessary to ensure the prosperity of your business. Whether you keep it in the family or sell to another person, it is never too early to start planning for succession.