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U.S. Planning Group, Inc.®

Why if you don't have a succession plan, you are putting your business at risk

By Glenn Williams

Previously we discussed how only a small percentage of financial advisors have a retirement plan. So it isn’t surprising that most advisors also do not have a succession plan. What’s the difference between the two plans and why is it important?

A retirement plan is a personal financial plan with the goal of how to accumulate the assets needed to stop working. A succession plan is a business-focused plan concentrating on two things: how the business can be best prepared to continue operating in your absence and how best the value you have created in your business can be “harvested.” Without a plan, it is likely that your business will lose value or be sold at “fire sale” prices. 

We recently helped one of our U.S. Planning Group, Inc. advisors successfully transition his business to new ownership. The most important lesson we learned is to plan, plan, and plan some more! Your succession plan should focus on the “how,” “who,” and “when” of transferring business management and/or ownership on to someone else.

The plan should start with the ideas and goals of the business owner. A profile of the “ideal” new owner successor should be created and used for recruiting. If a family member is to be the successor of the business, then special attention should be given to the family member’s abilities compared to the needs of the business. A successor needs to be trained in how to manage your business’s unique qualities.

Developing a succession plan requires work, but will pay off with peace of mind and increase value in a sale. To learn more about succession planning, see our special report in our “Industry News/Whitepapers” section of this website.

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Check the background of this financial professional on FINRA's BrokerCheck