The last thing you want is for your business to crumble after you’ve spent a lifetime building it. “Succession planning can help ensure that your wishes are carried out for your business,” says John Muench, Financial Center Manager with Fifth Third Bank. “Without a proper plan in place, important decisions are left for other people to make.”

Five common mistakes
Muench outlines five common succession planning mistakes – and what you can do to avoid them:

• Failing to plan in advance. You should create a succession plan as soon as you start your business so you are prepared for the unexpected. While drawing up plans for starting your business, consult a financial professional for guidance on creating one. He or she can help you draft a succession plan that aligns with your goals. If you don’t have a succession plan for your business, it’s not too late to create one. Consult a financial professional to get started. And remember, even after you have a plan in place, continue to review it on an annual basis to ensure everything is accurate.
• Waiting to address who will take over the business. Small business owners have the responsibility of finding people who are able and willing to run the business when they no longer can. This may be a family member or non-family member, such as a current or past employee. “As the owner of the business, you know what it takes to make it successful, so look for people who are interested and capable of doing the job,” says Muench.
• Keeping the business succession plan separate from the estate plan. Many business owners intend on leaving their business to heirs through an estate plan, but don’t take into account gift and estate taxes. Working with a succession team that includes a financial professional, lawyer and accountant can help ensure you cover all legalities and understand the taxes your heirs will need to pay. A succession team can also help ensure your business is properly divided so all heirs receive an appropriate inheritance.
• Low-balling the value of the business. Your business is worth more than its balance sheet total. “Many business owners don’t take into account their own history with the business, expertise and contacts – all of which have value,” Muench says. He suggests working with your succession team to help guarantee your business is correctly valued, which is important whether you plan on selling your business or leaving it to heirs.
• Not planning for disability. It’s important to have a plan in place in case you become unable to work due to illness or injury. It’s also important to set up a living trust or power of attorney. Your succession team can help you find the right person to write and administer these legal documents.

An ongoing process
Remember, succession planning is an ongoing process, so continue to review your plan on an annual basis to make sure everything is up to date and accurate. A Fifth Third Bank financial professional can help you build a succession plan that’s right for your business and find a succession team you are comfortable working with. “Although you may be new to succession planning, we’re experienced in this area and can help get your questions answered to help your business succeed,” says Muench.

To learn more about succession planning, contact Fifth Third at (866) 475-4201 or visit 53.com.

Fifth Third does not provide legal or tax advice. You should consult your tax advisor with any questions.