The Entrepreneur’s Corner
Solidifying the long-term future of your business
Here’s an important question for busy business owners – what’s next for your company? Not just tomorrow or even in the months ahead, but when the time comes that you or one of your key employees retires or leaves the organization unexpectedly?
At a time when many baby boomers are thinking about retirement, those who own a business need to plan not just for their life after work, but for the future of the firm they’ve committed so much of their lives to. In a small- or mid-sized business, the owner and perhaps other key personnel play such a vital role that special planning is required to prepare for circumstances in which any of these individuals is no longer part of the organization. If your business doesn’t have a succession plan in place, it is an issue that needs prompt attention.
There are a number of questions to consider in helping prepare for the period of transition a company inevitably faces. They include:
• Who is in line to follow the principals of the firm? The most fundamental aspect of a succession plan is to have a replacement (or replacements) in line. In many cases, a family business will move from one generation to the next. In other situations, a trusted employee or group of employees may need to be groomed and prepared to assume control of the company in the future.
• How will control of the business be transferred? Once successors are identified, there are a variety of ways that control of the business can be transferred to them. Among the options are an outright sale to the new owner – either in a one-time transaction or an installment sale – or the use of a trust vehicle, such as a grantor retained annuity trust (GRAT) or a grantor retained unitrust (GRUT). Those are irrevocable trusts to which you transfer appreciating assets while retaining an income payment for a set period of time. At either the end of the payment period or your death, the assets in the trust pass to the other trust beneficiaries (the remainder beneficiaries). The value of the retained income is subtracted from the value of the property transferred to the trust (i.e., a share of the business), so if you live beyond the specified income period, the business may be transferred to the next generation at a reduced value for estate or gift tax purposes.
An important consideration in the decision-making process is potential tax ramifications, particularly for the seller. There are tools available to help reduce the potential impact of capital gains, estate and gift taxes when a sale occurs. Good planning plays a critical role in making sure that both the seller and the buyer achieve the most favorable results.
• What forms of protection are in place in case an unexpected event occurs? The need to implement a succession plan can sometimes strike without notice. Businesses that involve partners or likely successors, for example, may benefit from having a buy-sell agreement in place.
A buy-sell agreement lets you keep control of your interest until the occurrence of an event that the agreement specifies, such as your retirement, disability, or death. Other events, such as divorce, also can be included as triggering events under a buy-sell agreement. When the triggering event occurs, the buyer is obligated to buy your interest from you or your estate at the fair market value. The buyer can be a person, a group (such as co-owners), or the business itself. Price and sale terms are prearranged, which eliminates the need for a fire sale if you become ill or when you die. Remember, however, that you are bound under a buy-sell agreement.
Business succession is a complex matter. It involves close work with a financial advisor, tax specialist and an attorney experienced in these types of matters to structure a solution that is most suitable for your business and potential successors.
Mothers Against Drunk Driving (MADD) will host a candlelight vigil of remembrance and hope Tuesday, Dec. 2 at 7 p.m. at the University of Richmond, outside the Cannon Chapel. The public is invited to attend and join MADD to honor victims of impaired driving crashes, while helping to remind the community to be safe during the holidays. > Read more.
Among participants at the Seventh Annual Coordinators2Inc Golf Tournament and awards luncheon Oct. 3 were (from left) Rebecca Ricardo, C2 Inc executive director; Kevin Derr, member of the winning foursome; Sharon Richardson, C2 Inc founder; and Frank Ridgway and Jon King, members of the winning foursome.
Held at The Crossings Golf Club, the tournament will benefit placement of children from Virginia's foster care system into permanent families through Coordinators2. > Read more.
Event will help kick of Marine Corps' 'Toys for Tots' campaign
All 140 A.C. Moore locations will serve as drop-off centers this year for the Marine Toys for Tots Foundation, and all toys collected will stay in the local communities served by the stores in which they are donated.
On Saturday, Nov. 15, the Willow Lawn location will kick off the month-long program by hosting a "Make & Take" craft event for kids. Children ages six and older will be able to make a craft and take it home with them. Representatives from the Marines will be in-store to teach customers about the Toys for Tots program. A.C. Moore team members will be on site to help with the crafts. > Read more.
Bella’s feels – and tastes – like Italy should
Short Pump is known for its share of chain restaurants and strip malls, but diners looking for something more distinct can certainly find it without heading downtown or to nearby Charlottesville.
In fact, local husband-and-wife restaurateurs Valeria Bisenti and Doug Muir brought a taste of Charlottesville (and Italy) to Short Pump when they took a chance and opened Bella’s second location in the same shopping strip as Wal-Mart and Peter Chang China Cafe. (Bella’s original location is on Main Street in downtown Charlottesville.)
For a local Italian restaurant, Bella’s is as “Mom and Pop” as its gets. Valeria is Mom, and Doug is Pop. Since its opening about six months ago, diners have been eating rich comfort foods and drinking Italian wines. > Read more.
Find out how your favorite dining establishments fared during their most recent inspections by the Virginia Department of Health. > Read more.
The Cultural Arts Center unveils a new exhibit – "Sizing Up!" – Nov. 20-Jan. 18 in the Gumenick Family Gallery.
Artist Chuck Larivey has spent the past three years "sizing up" – creating large-scale oil paintings that are designed to engage their viewers in a monumental way by using size to captivate them and make them a part of the artistic experience.
The exhibit is appropriate for all ages and is free and open to the public at the center, located at 2880 Mountain Road in Glen Allen. > Read more.
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