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Exit strategies help business owners anticipate future needs

Many Moorestown residents have estate plans. In fact, this legal blog has previously posted about the benefits of creating testamentary documents to protect individuals' wealth after they pass away and to protect their property from the probate process. In business, an estate plan may technically not be feasible. However, business owners can make plans to wrap up their businesses long before they are ready to close their doors.

A closing plan for a business is generally called its exit strategy. An exit strategy provides instructions on what should happen to a business if the proprietor becomes disabled, dies or chooses to walk away from the business and leave its operations to someone else. Exit strategies can vary in how they look and function based on the particularities of the businesses they serve. Business owners who wish to create such plans can speak with their legal counsel about preparing such instructions.

The United States Small Business Administration recommends that business owners at least train someone to take over their enterprises in the event that they are unable to serve as business leaders in the future. Having a succession plan takes away the immediate question of what will happen if a business leader becomes unable to serve. Further considerations can involve how employees will be treated and compensated if a business wraps up, how assets will be distributed and a myriad of other issues that only arise when a business is closed or transferred to another owner.

The closure or sale of a business can bring a lot of work onto the shoulders of the owner. Considering issues related to such business transactions in advance of their occurrences can save business owners time and money. Exit strategies are effective tools for preparing for business closures well before such actions are even real possibilities.

Source: SBA, "Getting Out," Accessed April 8, 2015

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