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Sep 29, 201610:26 AMOpen Mic

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Succession-planning resource where you least expect it

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Ask business owners what worries them and they are likely to mention economic volatility, taking risks, adequate working capital, and cash flow. But there is one thing that often keeps them awake at night: succession planning. Who will take over the business when they are ready to retire?

Despite that level of anxiety, relatively few business owners actually have a formal succession plan in place — fewer than 30%, according to the 2015 FPA/CNBC Business Owner Succession Planning Survey. What many business owners don’t realize is that their commercial banker can be an ideal resource to help them with not only that, but a host of other business services and concerns.

The survey found that 78% of business owner clients plan to rely on the sale of their businesses to fund their retirement. Conducted by the Financial Planning Association with CNBC among FPA members, the survey also found that the biggest challenges for the business owners were being emotionally ready to relinquish control (33%) and finding a buyer (21%).

Although business loans and access to capital are vital to a business’ success, commercial bankers are in a position to offer far more to business owners. There are many factors to consider, but the best bankers are those who provide relationships and services tailored to you and your business.

Entrepreneurs need bankers with the expertise to help them succeed and grow. A banker who truly understands you and your business can be a trusted partner who can work with you from startup to sale or succession to a partner, employee, or adult child. The following are some areas beyond lending in which commercial bankers can help business owners.

Investment services and estate planning — Investing profits for additional income or to grow your business is key to your business’ long-term success. Whether building a nest egg with a financial advisor, or protecting and enhancing your assets with a wealth advisor, your banker can connect you with an investment professional that fits your unique needs. Specialized wealth advisory services such as estate planning can also include investment management, trust services, and financial plans.

Tax planning — Ideally, business owners would work with a tax attorney or advisor as part of their overall financial planning. However, building a business day-to-day requires a lot of time and effort. Often, tax strategies aren’t even considered until year-end rolls around. This translates into business owners seeking last-minute ways to reduce their tax burden, often by taking steps such as large year-end purchases. Your banker can refer you to a tax specialist to work with over the long term, as well as suggest strategies such as deferring income and accelerating deductibles or accelerating income and deferring deductibles, depending on your tax bracket.


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