During Oakland Small Business Week, a real estate financing company ran a session on “Legacy Business Planning,” with the subtitle: How real estate and succession planning can help secure your business future.
If you’ve ever been at the whim of a landlord, you might guess the answer is to own your building.
What was interesting is that TMC Financing is a non-profit that is the largest provider of “SBA 504” commercial real estate financing in Northern California. They have helped under-capitalized businesses manage to buy buildings against all odds. Their projects total more than $9 billion and have benefitted more than 5,000 businesses.
The Small Business Administration (SBA) 504 Loan Programs offer small businesses affordable, interesting options for owning your buildings that allow for more flexibility and the potential to pass along to future generations, investors, employees, or partners.
It’s important to apply for loans before you have a building in mind. Much like when buying a home, being all set up streamlines the offer process and purchase transaction.
Planning a legacy business goes beyond the physical building.
Many small businesses don’t have family to pass the business to. Or the family has other careers in mind.
TMC laid out a few succession options in their presentation:
- Close down
- Get acquired
- Sell to family
- Arrange for employee ownership
Starting as a worker-owned co-op (so everyone has a stake in the outcome) or converting your business to an employee ownership is one way to keep your business thriving when family ownership is not an option. Bob’s Red Mill is one classic example of this structure.
Just like planning your own estate, think about “that time” early on rather than when under duress. Planning your legacy can be a thing of joy!
