Planning to transition your business to new owners begins by stopping the procrastination process.
Whether you are a sole proprietor or in business with partners or family, succession planning involves determining the right strategy for handing over your business to someone else and preparing your clients and staff for the change.
On Feb. 26, the Geauga County Community Investment Corporation will host “Your Exit Strategy: Succession Planning for Your Business.”
The workshop will be held at Bass Lake Taverne, 426 South St., Chardon, and starts at 8:30 a.m. It is free to CIC members, but there is a $10 registration fee for non-members.
While the vast majority of business owners want to pass on to the next generation, only 43 percent of family businesses have a succession plan in place, said Anita Stocker, director of the Geauga County Community and Economic Development Department.
“It’s usually due to one or more issue,” Stocker said. “They don’t have the time to write a plan, they don’t want to pay a professional to help them write the plan, they don’t want to deal with angry children or alienate long-time employees, or they don’t want to deal with their own retirement and separation from the business.”
In fact, some owners’ “plan” could be to not have a plan, she added.
“While by no means is this the best way to protect assets and family wealth, it would certainly make for friendlier family holiday get-togethers,” Stocker said. “But having no plan is the lazy man’s answer to the problem.”
With an aging baby boomer population, there is a large percentage of businesses that will be sold in the next five to 15 years, said Roy Messing, director and certified exit planning advisor of the Ohio Employee Ownership Center at Kent State University, and one of the speakers on the panel.
“That’s going to create a lot of change in the marketplace,” he said, noting less than 10 percent of companies today transition from family member to family member once beyond the first or second generation of family ownership.
“Very few transition to the family and, if you don’t plan what that exit is going to look like, you’re kind of rolling the dice as to how you’re going to look financially or your business might look financially,” Messing said. “We believe that succession planning is really part of a strategic plan and a business owner needs to build in when and where they are going to exit the business so they can work toward that goal.”
Kelly Slattery, an attorney with Thrasher, Dinsmore & Dolan in Chardon, said for many of her clients, a closely-held business interest is one of the largest — if not the largest — assets in their portfolio.
“Creation and implementation of a carefully tailored business succession plan is critical both for the financial position of retiring owners as well as the future growth and success of their company,” she explained. “Taking the steps to put a sound business succession plan in place can be the determining factor in whether a business will continue to thrive into the next generation of owners.”
While the Feb. 26 workshop is designed for business owners, professionals who provide financial, legal and consulting services to businesses are also encouraged to attend.
Topics to be detailed by the panel will include:
• Will you sell or close the business?
• Do your children want to take over?
• Have you begun transitioning your company?
• How much is the business worth?
• What’s the plan for your employees?
• What about taxes?
• Do you have a draft buy-sell agreement?
“Business succession planning encompasses a wide realm of planning for the owners of closely held businesses,” Slattery said. “(These plans range) from proper tax and estate planning for owners, creation of appropriate buy sell agreements, devising plans for transition of ownership to a third party, to the next generation or even to employees, and implementation of those plans.”
Rounding out the panel is Elizabeth Dillon, CFO, a certified valuation analyst with NMS, Inc., a Chardon-based certified public accounting firm.
Pre-registration is requested due to limited seating. To register for the workshop, contact Kelly Belconis, assistant program administrator, Geauga County CED, at 440-279-1790, or email dweber@co.geauga.oh.us.