Page 31 - Flathead Beacon // 4.30.14

FLATHEADBEACON.COM BUSINESS MONTHLY APRIL 30, 2014 | 31

FINANCIAL CORNER Jesse Rigler
lathead valley’s best
NATURAL
Take Steps to Protect

Your Family Business

SELECTION
T
HERE’S NOTHING MORE membersinvolved.
important in the world to you Your succession plan could be based
CIGARETTE
DEPOT
than your family. However, your on a family limited partnership. Under TOBACCO SUPPLY STORE
family-owned business probably helps this arrangement, you, as general part-
support your family as is the case with ner, would maintain control over the 4 RIVER ROAD, KALISPELL
(406) 257-6653
most small business owners in the Flat- day-to-day operation of your business, YOU DESERVE THE
(25-SMOKE)
head Valley. So, when it comes to pro- but, over time, you could gift or sell lim- LOCALLY
tecting both your family and your busi- ited partnership shares to your fam-
ness, you need to carefully consider your ily members. And eventually, you would OWNED LOWEST PRICES
AND HERE 175 HUTTON RANCH RD
moves.
also relinquish control of the business to TO SERVE
STE. 110, KALISPELL ALLOWABLE BY STATE!
As you know, you face plenty of chal- whoever is going to run it.
(406) 257-7518
lenges to keep your business running Another component of your succes-
smoothly — but it can be even more dif- sion plan might be a “buy-sell” agree-
icult to pass the family business on to ment, which allows you to name the
your children or other relatives. In fact, buyer for your business — such as one of
according to the Small Business Ad- your children — and establish methods
ministration, only 33 percent of family to determine the sale price. Your child

owned businesses survive the transition could then purchase a life insurance
from irst generation ownership to the policy on your life and eventually use the
next generation.
proceeds to buy the business, according
Why is it so hard to keep a family to the terms established in the buy-sell
business intact? Sometimes, it’s because agreement.
no one in the family is interested in run- We’ve just skimmed the surface of
ning the business — but family business- techniques that might be used alone or

es frequently disintegrate because of the in combination to carry out your busi-
lack of a succession plan.
ness succession. The transfer can be
To create a succession plan, your complex, so you will certainly need to
irst step — and possibly the most impor- consult with your legal and inancial
tant one — is to collect the thoughts and professionals. It’s important that you
preferences of family members on their fully understand the business and tax
future involvement with your business. implications of any succession plan, as
It’s essential that you know who wants well as the inancial efects of a plan on

to really do the day-to-day work and who all your family members.
is capable. During these conversations, In any case, once you’ve created your
you’ll also want to discuss other key succession plan, you’ll need to work with
business-succession issues, such as the your legal advisor to put it in writing
retirement goals and cash low needs of and communicate it clearly to all fam-
retiring family owners and the personal ily members. Surprises are welcome
and inancial goals of the next genera- in many parts of life — but not when it
tion of management.
comes to transferring a family business.
In developing a plan for the future You want to leave your family a lega-
of your business, you will need to deter- cy. And if that legacy is the family busi-
mine who will control and manage the ness, do whatever it takes to pass it on
business, and who will eventually own in a manner that beneits everyone in-
it. These decisions will depend on a va- volved. This will take time and planning
riety of factors, such as the time horizon, — but it can be well worth the efort.
goals and inancial needs of the family

Jesse Rigler is a inancial advisor at Edward Jones in Kalispell.

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