Who the heck starts a business or partnership and plans to fail? Nobody does but most will fail because they never planned for the eventual success either. This involves succession planning strategies to be a part of the long term business plan – it’s not always about business or is it?
For majority of people, death is the last thing that they want to think about especially when they’re just starting a business venture or partnership.
It’s like planning a voyage at sea and not preparing or planning for the possibilities that the ship may capsize or sink. “It’s never going to sink or take on water”, are only uttered from the lips of foolish and possibly dead captains.
Just like a seafaring vessel, you need to have your life rafts, floatation devices and life jackets in the event that the ship may sink. Not having it is foolish and reckless.
How many lives will be affected if the ship does sink and none of those were available? Would you agree that the decision to not have them would be criminal? Perhaps you may disagree with my tone but the families left behind such a preventable tragedy will label it criminal negligence and the court will agree. Just like the Titanic’s sinking. Many more people could have survived if they had the proper number of life rafts. Not having a proper succession planning strategy may have a similar ending like the Titanic.
So why don’t people have succession planning? These are some of the possibly valid reasons (or are they?):
No time. I call this for what it is: bull crap. It’s not about lack of time but the person’s perception of “wasting time” on a seemingly unimportant topic. People can make time for anything if it is important enough. Don’t bring a life jacket on your sea voyage, see how important it would’ve been to take time to bring it with you when your boat is sinking.
It’s an unnecessary expense. Really? Most people spend more each month on their Starbuck’s coffee budget than what it could cost to purchase partnership buyout life insurance. Your company can write off 100% of the insurance cost but those expensive coffee can only be partially written off or not at all (depending on your employment setup).
It’s bad luck to buy life insurance when starting a business etc. For those superstitious people, don’t buy insurance on your car because you just got your license. Tell me how much good luck you get. Yes, I’m being facetious. Seriously though it’s very shortsighted to not carefully consider the ramifications if you don’t have it.
If you are going to be in business with a partner, why not plan for success and eventual succession at the beginning? Or were you planning to fail? A wise man once said “most people don’t plan to fail, but they just fail to plan“; and thus they eventually fail.
Here are a few strong reasons to have succession planning strategies written out and put into action at the beginning:
It’s like having a will for your business that will outline your wishes as to what happens after you’re gone (beside it’s bad enough that it would be a loss to everyone when you die so why be the cause of more pain than just grief because of your death?)
It will allow the business to continue uninterrupted and won’t have any detrimental affect on anyone else (besides if your plan was to do good and leave a legacy behind, don’t allow it to unravel just because your physical body decided to take a permanent vacation).
It will allow an equitable payout and a way to buy out any goodwill or equity stake in that business or partnership (if you were a winner when you were alive, why be a loser when you die?)
It is a very important part of tax deferral and estate planning strategy (speak to a financial advisor and tax planner for more details; unless you prefer to give a lot more to the government than when you were alive filing your taxes)
Most importantly is the peace of mind everyone will have while all parties are still alive and keep everyone’s focus on the success of that business or partnership (get it over with at the beginning of the game so that you can keep your eyes on the ball and be able to score more goals throughout the game).
If you are planning to play to win and leave a legacy behind, it starts with how you plan. Why not plan for success?
If you don’t know where to start to help you with succession planning, find someone who is a centre of influence and ask them for suggestions. If you happen to live in my part of the world (Vancouver, BC areas), I can send you a few names.
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Sua Truong helps alleviate stress for his clients throughout the challenging process of financing their property so that they can enjoy their life and focus on their family or their business. His integrity is the cornerstone of what he does and why he has been so successful in such a short period of time as a mortgage broker. In just under 5 years, he has become the #1 Mortgage Broker in his community. He currently trains entrepreneurs and other mortgage brokers how to stand out and be outstanding. This way they too can become the #1 Go-To Expert in their community.
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