As an entrepreneur or owner, you’ve invested time, money, and energy into building your business. But have you considered what will happen if you’re no longer able to manage it? Having a “business will” is a crucial step in protecting your legacy and planning for long-term success. It isn’t all doom and gloom either. During your normal course of business you could have many reasons to need a clear exit plan, and your business will provides just that.
With that, here are some of the reasons why you should make a will for your biz today:
The Right Will Protects Your Business In Many Situations
If you become incapacitated or pass away without a will, your business may be left in limbo. Without clear instructions on who will take over, your business could be vulnerable to mismanagement, legal disputes, or even bankruptcy. In other words, not having an exit strategy for these scenarios can be the reason your business falls apart without you. In addition to loss of life, there are many other scenarios to plan for when it comes to your business. Above all, creating and reviewing these plans serves to ensure that your business will get the protection it deserves.
You’ve put in a lot of hard work to build it, and you want to make sure that hard work can be passed on. Creating a will helps to make certain that your business will continue to operate smoothly, even after you’re no longer at the helm.
A Will Is A Plan for the Future
Secondly, a business will helps you to plan for the future. You will make decisions about what will happen to your business when you are no longer able to manage it. Still, it’s not a topic that a lot of owners want to discuss; however, it’s critical to an informed long term plan. Key elements will include:
- Successor appointment
- Role and responsibility definitions
- Ownership transfer plans
So, transfer of ownership can be a difficult task even at the best of times. But, having a plan can ease the burden from your loved ones or business partners. As a result, a business plan is especially important to provide certainty in case of a sudden or unplanned transfer. Above all, your actions today can help reduce this stressor in what could be a very challenging time.
Wills Help Avoid Legal Disputes
Creating a will for your business can help you avoid legal disputes among your heirs or business partners. By outlining your wishes and intentions clearly, you can reduce the risk of disagreements and conflicts that could threaten the future of your business.
But let’s face it – not all of our hopes for how the business is handed over will become reality. Those we might wish to take over the business may not be interested or want that responsibility. By running through scenarios for your business, you may uncover these situations. This allows gives you and those around clarity and comfort in knowing the future plans of the business.
Maintain Business Continuity
When a business owner, partner, or executive leaves a corporation, it can have a significant impact on the company’s success. According to a study by the Family Business Institute, only about 30% of family businesses survive into the second generation. Furthermore, only 12% make it to the third generation. With regular review, the legacy of your family business can live on by ensuring it’s ready for any changes.
Provide Financial Security With A Will
Equally important is that a will for your business can provide financial security for your loved ones and business partners. In fact, designating a successor and making a plan to transfer ownership helps ensure your business remains profitable and that your heirs receive the benefits of your hard work. With a clear plan, you help to ensure that the costs and burden of transfer are limited.
In summary, creating a will for your business is a crucial step in protecting your legacy and ensuring the long-term success of your company. Planning for the future with a business will means you can rest assured that your loved ones and business partners can start off on the right foot. It’s important to protect all the work you’ve put into building your business. Even if you have great business documents, a will can save you and your business in the long term.
In case you want to learn more about creating a will for your biz, check out our episode with Jessica Theroux from The Couillard Group . Or, give her a call and ask how you can protect your biz.
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- Family Business Institute. (n.d.). Frequently Asked Questions. https://www.familybusinessinstitute.com/faq/
- Murphy, P. (2019). The Importance of a Business Will. https://www.thebalance.com/importance-of-a-business-will-4173026
- National Federation of Independent Business. (n.d.). Succession Planning: Preparing for the Future of Your Business. https://www.nfib.com/content/resources/start-a-business/succession-planning-preparing-for-the-future-of-your-business/
J.P. is a multi-certified coach, project and program manager, podcast host and entrepreneur.