Small Business Succession Planning in Wisconsin
By Andrew Bosshard, Business Law Attorney
Every successful small business eventually faces the same question — what happens when the owner steps away? Whether you plan to retire, sell, or prepare for the unexpected, creating a clear succession plan ensures a smooth transition, protects your company’s value, and gives employees and family members peace of mind. Succession planning isn’t just for large corporations. In Wisconsin, thousands of small businesses rely on one or two key people to keep operations running. Without a plan in place, an owner’s sudden departure can lead to legal complications, financial loss, or even business closure.
What Is Business Succession Planning
Succession planning is the process of outlining how ownership, management, and decision-making authority will transfer when you leave the business — whether by choice or due to unforeseen events. A strong plan provides structure for the next generation of leadership and ensures continuity of operations, clients, and employees.
Key Components Of A Strong Succession Plan
Decide How Ownership Will Transfer
The first step is determining who will take over the business. You might transfer ownership to a family member, sell to an employee or partner, or look for an outside buyer. Each option carries unique tax and legal implications, so it’s important to evaluate what aligns best with your long-term goals.
Identify And Train Your Successor
Selecting a successor early allows you to mentor them and pass along institutional knowledge. Gradual training ensures the transition feels natural and that clients and staff maintain confidence in new leadership.
Draft A Buy-Sell Or Transfer Agreement
A buy-sell agreement formalizes how ownership shares or interests will be sold or transferred. It defines the purchase price, payment terms, and triggering events such as retirement, disability, or death. This document prevents disputes and ensures everyone understands their rights and obligations.
Determine Business Valuation And Tax Implications
Knowing your company’s fair market value is essential. Regular valuations help you make informed decisions about selling, gifting, or transferring the business. Your attorney can also help structure the plan to minimize taxes at both the federal and state levels.
Update Legal And Financial Documents
Your succession plan should work in harmony with your other legal documents — including your operating agreement, trust, will, and powers of attorney. Reviewing these together ensures consistency and prevents conflicts later on.
Prepare For Unexpected Events
A contingency plan is critical if you become suddenly unable to manage the business. Identifying who can make immediate decisions keeps operations running while long-term ownership matters are resolved.
Wisconsin-Specific Considerations
In Wisconsin, community property laws, partnership agreements, and local tax rules can all impact how your business transfers. For family-owned or closely held companies, these factors must be carefully coordinated to avoid disputes among spouses, heirs, or co-owners.
Business owners should also consider how succession fits within their broader estate plan. Aligning both ensures your assets, retirement income, and tax strategy remain consistent across your personal and business life.
Why Planning Ahead Matters
Taking time to create a succession plan now provides several key benefits:
- Ensures a seamless leadership transition
- Protects the company’s value and reputation
- Prevents legal conflicts among family members or partners
- Reduces tax burdens and financial uncertainty
- Offers peace of mind for everyone involved
Common Mistakes To Avoid
Many business owners wait too long to plan. Others fail to update their documents as the company evolves. Avoiding these mistakes can save time, money, and relationships:
- Waiting until retirement or illness to plan
- Ignoring tax and legal consequences
- Failing to document verbal agreements
- Overlooking training for future leaders
- Not communicating the plan with key stakeholders
- Considering the use of life insurance to help fund ownership transfers and address “unplanned” succession
Plan For The Future With Bosshard Parke
At Bosshard Parke, we help business owners throughout La Crosse, Sparta, and western Wisconsin prepare for the future with customized succession plans. Our attorneys understand how to align business operations, tax strategy, and estate planning to protect your life’s work.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. For personalized guidance, please consult an attorney at Bosshard Parke.
