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June 28, 2024
New Mexico’s Legal & Financial Weekly
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Many Business Owners Lack a Succession Plan
Vol. 10.104 No. 26
AUCTIONS: 12 SPANISH NOTICES: 2
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merica’s business owners are facing increasingly complex challenges, not only tracking the nuts and bolts of the daily tasks that come with owning a business, but keeping up with things like technology and managing healthcare costs for employees. However, many business owners have not made plans for the future of their business, based on a survey from financial services firm Edward Jones in partnership with Morning Consult and NEXT360 Partners.
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Approximately half of American business owners are currently over the age of 55, and many of them may be considering retirement, but more than a third say they have no succession plan in place, according to the survey, which was conducted in April 2024 and included 400 business owners who responded to online questions and unstructured interviews. Among business owners with no succession plan, 38% reported their business is not at a point at which succession planning is a priority. Both uncertainty about the future of the business and how to start making a succession plan were the top reasons for not having one (32% for both), according to the survey. “For many business owners, short-term priorities associated with running a the owner’s vision and the organization’s commitment to the integrity of business might feel more urgent than planning for future succession,” said the business. Katherine Roy, Principal, Retirement Products at Edward Jones, in a press release announcing the survey findings. “However, business owners should Financial advisors can help business owners build a successful plan to consider what will happen once they leave the business, whether by selling, help ensure a smooth transition of the business, but only 37% of those retiring or becoming unable to manage the business due to health or age. A surveyed reported using a financial advisor to help with transition issues well-conceived succession plan allows the owner to identify what their ideal and decision-making. exit looks like and address tax, business, estate and liquidity considerations that reflect both business goals and family dynamics.” “Even if a business owner already knows the succession plan that they want put in place, a financial advisor can guide them through all of the complexities Business owners said that barriers to making a succession plan are emotional and challenges owners face when determining and implementing the future as well as logistical; 26% said they were unable to identify a successor, but of their business,” said Zachary Gildehaus, Business Owner Strategist, 88% believed that their businesses will grow over the next decade. Client Needs Research at Edward Jones. The survey results showed that four main factors drive the need for a business transition. The first is the legacy of the business and the future For more information about the survey visit: www.edwardjones.com/ of employees and stakeholders. The second consideration is the market, in NextInLine. which the sale or exit of an owner is needed to maintain business operations and part of the proceeds will fund the owner’s retirement. The third factor is a health event or other change in priorities or circumstances for owner -(NewsUSA) and the owner’s family. Lastly, the sale of the business also must align with