This is part three of a series in which we’re exploring 12 questions which were developed by Thomas Deans, PhD, to make sure family business develop successful exit strategies.
Question #7: In preparation for the annual update of the business blueprint, I will arrange for an updated valuation of the business and will calculate whether there is an appropriate amount of insurance in place. I will furnish evidence that this has been done and that estate taxes will not impair the ability of this company to function after my death.
This question is for the parent.
This is a very deep question, considering what happens with your estate planning. Depending on where you are located, there will be different legal and other implications, particularly from a taxation perspective. It’s the same for valuation, which is definitely another subject that I will discuss in another blog.
It takes some time to go through this, and this question is simply a reminder to update this information annually, so you can keep up with whatever changes may be taking place.
Question #8: List at least three items in each of these four categories that will affect the health of the business over the next five years.
This is for both the parent and the child or successor.
This question is really a SWOT analysis. You’re going to look at the Strengths, Weaknesses, Opportunities and Threats and think seriously about at least three items that might affect you in each of those areas.
That’s three items in strength, three items in weaknesses, three items in opportunities and three items in threats. This will take some time to complete, especially getting the perspective from both the parent and the child.
Question #9: To secure our future prosperity together we should either A) continue to run our business and invest more of our money in our company, or B) proactively pursue the sale of our company.
This is for the parent and the child.
You’re looking for simple yes/no answers from the parent and the child to see if you’re on the same page.