New Zealand is a nation of small businesses.  Most are owned or run by one person.  If the working proprietor should become incapacitated or die suddenly, how is the business to continue without their driving input? If this happens the business can be very vulnerable to its competitors, or from mismanagement, or might simply be unable to continue to operate at all.

Proper succession planning is therefore crucial.

Here are some suggestions:

• Have a plan.  Hopefully it will never have to be used, but at least you will know that arrangements are in place should anything happen to you.
• Consider the following:
  • How will the day-to-day operations continue without you?
  • Are other family members in a position to run the business?
  • If the business should discontinue, have a plan for its immediate sale so that at least its value will not be lost entirely.
  • Take advice about what insurance is available and appropriate.  The bills will still have to be paid so a fund to assist with this could be vital.
• If the business can continue without you, make sure that you have competent and trustworthy management in place, and that your executors are capable of giving the appropriate supervision.
• Make a Will and keep it up to date.

What if I want to retire?

• You can sell the business outright, and retire on the proceeds.
• If you want to hand it down to family members, how do they pay you?  Are you sure they are capable of running the business?  What if there are competing interests?
• You might want to retain a minority interest in the business, but you will need to ensure that you are adequately protected if you do this.
• Be aware that any personal guarantees of the business’s liabilities, e.g. the bank overdraft, will remain binding on you after you retire unless you cancel them.

We believe that all small business owners should give serious thought to these issues, and take steps to put a suitable contingency plan in place.

Typically our clients go about it by simply picking up the phone.  All it requires to get started is to call us to arrange an initial consultation.