Image of machinery and an empty field, representing the need for Indiana business succession planning.

While most small business owners say they have started thinking about succession planning, only around 50 percent have a plan in place, according to research by US Bank. Having a formal succession plan in place is the best way to ensure your business carries on after you retire or are no longer able to run it.

It’s also advantageous to have a business succession plan when you don’t intend to transfer ownership. Perhaps you want to have your business sold, liquidated, or closed when the time comes for you to leave the command post. This plan still requires mapping for maximum efficiency and benefits.

At Indiana Estate & Elder Law, we want to give our clients the peace of mind that comes with knowing you have done all you can to preserve your legacy. Our Indiana business succession planning services can help you work through the complexities and hurdles that often prevent business owners from planning for the future sooner.

Family Business Succession Planning

According to the US Small Business Administration, more than a quarter of small businesses in the country are family-owned. In Indiana, the percentage of family-owned businesses hovers around 30 percent. These businesses operate in a variety of industries, including manufacturing, agriculture, transportation, retail, skilled trades, and professional services, among others.

Running a family business presents unique challenges, and most don’t continue beyond the founding generation. According to the Conway Center for Family Business, about 30 percent of family-owned businesses transition to the second generation, 13 percent pass successfully to the third generation, and just three percent survive to a fourth generation or beyond.

While some of these businesses fail for financial reasons, many profitable family businesses don’t make the transition due to family dynamics, a lack of open communication, and inadequate succession planning.

Without “family,” a family-owned business risks its continued viability. It’s often family members who hold a working knowledge of day-to-day operations and understand the relationships that built and run the business. Retirement, disability, incapacity, or death of the business owner(s) can be a trigger for a business transfer, and a smooth transition is much more likely with a clear plan in place.

How To Help Your Business Survive

Family-owned businesses are not alone in the struggle to transition through ownership changes. Small disadvantaged businesses (SDBs), LGBT business enterprises (LGBTBEs), minority-owned businesses (MBEs), veteran-owned businesses, and women-owned businesses (WBEs) are just a handful of small business types that could be impacted in the event of a founder or majority owner’s incapacity or death.

For small businesses of all kinds, it helps to have the answers to a few questions before sitting down and mapping an entire business succession plan:

Farm equipment and structures represent succession planning for family businesses like farms.
  • If you didn’t name a successor, who would be asked to assume your role after you (spouse, child, non-family member, key employee)?
  • If you did name a successor, would it be that same person? Why or why not?
  • If your successor is not a family member, will your spouse or other loved ones remain financially dependent on the business?
  • Do you need to plan for the inheritance of heirs who are not active in the business?
  • Can your business be impacted by your in-laws, pre-nuptial agreement, divorce, or other investors?
  • If you could envision the second-generation transfer of your business, what provisions have you made to help it succeed?

An Indiana business succession lawyer can help you work through these questions and others to help identify the strategies and tools that will best allow you to achieve your goals.

How To Help Your Business Thrive

Our business succession planning services aim to prevent the complications that can arise when a business changes hands. We also want to go beyond that, giving the next generation of business owners the best chance at success. This requires discussing and working through some important considerations.

Estate taxes are a pesky topic. Leaders of Congress and the White House regularly modify these rules following each election. You can stay current with these changes by bookmarking this explanation from the Internal Revenue Service (IRS). As a business owner, you are tasked with monitoring the legal climate of the country as well as your geographical area of business. If you remain proactive in estate-liquidity planning, your family may be able to avoid selling the business to meet an estate tax cash call.

Colorful, beaded artisan goods like those a small, creative business might sell.
Coordinating financial and estate plans seems like a tall order, though simply getting the right minds into one room can establish surer footing. Our attorneys can meet with you and your certified financial planner to efficiently form a strategic plan that considers financial and legal angles. We want to ensure your cash can fund your goals—think people-planning objectives, liquidity for estate taxes, and more. Tactics like using the proper amount of life insurance may effectively be used to fund such matters.
Business Buy-Sell Agreements (BSA) are contracts that detail how business interests are to be transferred if the owner retires, becomes disabled, or passes away. If a client is looking at buy-sell agreements specifically (beyond the coordination of estate planning), we refer them to attorneys who focus primarily on business matters.

Comprehensive Business Succession Planning Services

Simultaneously managing your personal estate planning and business succession planning drives a strategy that serves you personally and professionally.

Building a dual strategy is most cost-effective. Should you make changes to one plan, the other can quickly be updated too. If you join and continue our maintenance program, these costs won’t increase from the day you sign on the line.

Ready to get started or revisit your Indiana business succession planning? We would love to help! Reach out to schedule a consultation with us by calling (317) 863-2030 or completing our online contact form.