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.
Richmonders Jim Morgan and Dan Stackhouse were married at Lewis Ginter Botanical Garden in Lakeside Mar. 7 month after winning the Say I Do! With OutRVA wedding contest in February. The contest was open to LGBT couples in recognition of Virginia’s marriage equality law, which took effect last fall. The wedding included a package valued at $25,000.
Morgan and Stackhouse, who became engaged last fall on the day marriage equality became the law in Virginia, have been together for 16 years. They were selected from among 40 couples who registered for the contest. The winners were announced at the Say I Do! Dessert Soiree at the Renaissance in Richmond in February. > Read more.
The Fourth Annual Healy Gala will be held Saturday, Apr. 11, at The Cultural Arts Center at Glen Allen from 7 p.m. to 11 p.m.
The event was created to honor Michael Healy, a local businessman and community leader who died suddenly in June 2011, and to endow the Mike Healy Scholarship (through the Glen Allen Ruritan Club), which benefits students of Glen Allen High School.
Healy served as the chairman of Glen Allen Day for several years and helped raise thousands of dollars for local charities and organizations. > Read more.
The Richmond Battlefield Ruritan Club is holding a Brunswick stew sale, with orders accepted through March 13 and pick-up available March 14. The cost is $8 per quart.
Pick-up will be at noon, March 14, at the Richmond Heights Civic Center, 7440 Wilton Road in Varina.
To place an order, call Mike at (804) 795- 7327 or Jim at (804) 795-9116. > Read more.
Disney’s no-frills, live-action ‘Cinderella’ delights
Cinderella is the latest from Disney’s new moviemaking battle plan: producing live-action adaptations of all their older classics. Which is a plan that’s had questionable results in the past.
Alice in Wonderland bloated with more Tim Burton goth-pop than the inside of a Hot Topic. Maleficent was a step in the right direction, but the movie couldn’t decide if Maleficent should be a hero or a villain (even if she should obviously be a villain) and muddled itself into mediocrity.
Cinderella is much better. Primarily, because it’s just Cinderella. No radical rebooting. No Tim Burton dreck. It’s the 1950 Disney masterpiece, transposed into live action and left almost entirely untouched. > Read more.
The Cultural Arts Center at Glen Allen’s 2nd Stage series will present “An Evening of Country” with The Honky Tonk Experience, April 9-10 at 7 p.m. in the center’s Cardinal Ballroom.
Formed in the spring of 2003, The Honky Tonk Experience performs country classics and current country music, from Johnny Cash and Waylon Jennings to Dwight Yoakam and Dale Watson. The “Experience” is composed of five local musicians – Brad Spivey, Mike Lucas, Mark Watts, Clark Ball and Ryland Tinnell. The group has shared the stage with several national acts, including Travis Tritt, BR5-49, Dale Watson, Webb Wilder and Junior Brown. > Read more.
Find out how your favorite dining establishments fared during their most recent inspections by the Virginia Department of Health. > Read more.
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CalendarThe Pocahontas Chapter of the Virginia Native Plant Society will hold its monthly meeting at 7 p.m. at Lewis Ginter Botanical Garden, 1800 Lakeside Ave. Aaron Proctor, a district wildlife… Full text